Q2 2024 Banco Bradesco SA Earnings Call

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Marcelo Noronha: Good morning, ladies and gentlemen. I am Marcelo Noronha. I am here speaking from Cidade de Deus, the headquarters of Bradesco Bank, for the presentation of the results for the second quarter of 2024. Now, the time is... 10:31 a.m. And it's a pleasure for me to be with you again this morning, this beautiful sunny morning in the town of Osasco in Sao Paulo. And we are here to talk about our results for the second quarter, which hit 4.7 billion barrels of net income, growing 12% quarter on quarter.

Marcelo Noronha: meaning that the second vis-a-vis the first quarter of the year with this ROI that you see here on the screen. And here we have six topics that summarize our net income or summarize what happened in the second quarter of 2024. It could also be the summary and the conclusions that will lead us straight into our Q&A.

Speaker Change: Good morning, ladies and gentlemen, I am Marcelino to linear I am here is speaking from sedans are you deals the headquarter or Bradesco bank for the presentation of the results on the second quarter 2024.

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Speaker Change: 10, 31 a M.

Speaker Change: And it's a pleasure for me to be with you again. This morning in this beautiful Sunny morning in Midtown Novo's, a school in Sao Paolo and we're here to talk about our results for the second quarter, which had 4.7 billion barrels of net income growing 12% quarter on quarter.

Speaker Change: Meaning that the second visa would be the first quarter of the year. We there's a ROI that you see here in the screen and here we have six topics that summarize our net income or summarize what happened in the second quarter of 'twenty 'twenty four it could also be the summary, and the conclusions that will lead us.

Marcelo Noronha: First of all, we had solid and safe profitability growth. And here I'm referring to our loan portfolio and the mix that I am about to show you in a moment. We also posted an evolution of net NII driven by client NII quarter on quarter and also the reduction and control of loan loss provision expenses. We increased the expanded portfolio in all segments, including the wholesale bank, with emphasis on SME and MSME and individuals.

Speaker Change: Straight into our Q&A first of all we.

Speaker Change: We had a solid and safe profitability growth and here I'm, referring to our loan portfolio and the mix that I am about to show you in a moment. We also posted a nipple evolution of net NII driven by client and I I quarter on quarter and also the reduction in.

Speaker Change: Control of loan loss provision expenses, we increase the expanded portfolio in all segments.

Speaker Change: <unk> in the wholesale bank with emphases on SME and M. S N E and individuals but please note that we are not growing above market rates. We are growing in line with the market. We had improvement in N. P. O in all segments and also we posted growth in the coverage ratio.

Marcelo Noronha: But please note that we are not growing at above market rates; we are growing in line with the market. We had improvement in NPL in all segments, and we also posted growth in the coverage ratio. Operating expenses are growing in line with our expectations, and naturally, with a lot of discipline, we were able to accelerate our footprint, as we've been saying to you before. And finally, we were able to maintain our solid performance in the insurance segment. And further on, I will give you more details about every one of these topics.

Speaker Change: Operating expenses are growing in line with our expectations and naturally with a lot of discipline, we were able to accelerate our footprint as we've been saying to you before and finally, we were able to maintain the solid performance in the insurance segment and further on I will.

Speaker Change: Give you more details about every one of these topics our loan portfolio went beyond 912 billion with a quarter on quarter growth, but I would like to draw your attention to an increase of about 5% of the wholesale bank and Moreover.

Marcelo Noronha: We went beyond $912 billion with quarter on quarter growth. But I would like to draw your attention to an increase of about 5% in the wholesale bank and, moreover, MSMEs with a growth of 10.12%, and individuals also growing 5.7%. In the case of the MSME, I would like to remind you that here we have middle market segments and also the SME market. And moving on, look at the loan portfolio in the mix with similar growth in individuals 2.5% and 2.5% in companies. I'm speaking about quarter on quarter, but this snapshot gives you an idea of our mix. First, the first conclusion is that we grew in all directions.

Sammy: I am as Sammy's with a growth of 10 point, 12% and individuals' also growing five 7% in the case of the M. S. N me I would like to remind you that here, we have middle market segments and also as a niche market.

Sammy: And moving moving on.

Sammy: Look at the loan portfolio and the mix with similar growth in individuals, 2.5% and two and a half per sand in companies I'm speaking about quarter on quarter, but this snapshot gives you an idea of our mix first the first conclusion is that we grew in all lines.

Marcelo Noronha: Secondly, we grew with a very balanced mix in the mix, which ensures good NPL levels over time. Constant speed, but not, you know, spikes with client NII, because here we have payroll deductible loans, you know, real estate loans. These are all very important portfolios for us, and rural loans on the individual side, which allows us to have a good balance of our mix with low credit risk. Now, maybe the card segment that didn't grow as much is something that I will talk about later on.

Sammy: Secondly, we grow we grew with a very balanced in the mix with insurers. Good NPL levels, three time constant speed, but not you know spikes with client NII because here, we have payroll deductible loan you know real estate loans. These are all very important portfolio.

Sammy: It is for us in rural loans on the individual side, which allows us to have a good balance of our mix with low credit risk now maybe the card segment that didn't grow as much is something that I will talk about later on in terms of companies.

Marcelo Noronha: In terms of companies, look at SMEs or MSMEs growing by 7.2% quarter on quarter. And again, here, we had good growth in foreign trade, real estate, and working capital. But there was also very satisfactory growth in the company segment. I'm talking about SMEs and large corporations with a very good level of guarantees, which is higher than what we experienced in previous quarters. This also ensures a good balance for us in the coming quarters.

Sammy: Look at it as Sammy's or M. S amazed with growing seven 2% quarter on quarter and again here. We had good growth in foreign trade, you know real estate and working capital, but there was also a very satisfactory growth in on the company's segment I'm talking about.

Sammy: SME and large corporate.

Sammy: With a very good level of guarantees which is higher than what we experienced in previous quarters. There's also ensures good balance for us in the next coming quarters.

Marcelo Noronha: And this also demonstrates, and if you allow me to take a step back, this demonstrates our capacity for attraction or commercial attraction. Every day we deploy new models, we are improving our portfolio management with all of that business unit segment that we put together for the loan portfolio. I mean, traction is also important.

Sammy: And this also demonstrates and if you allow me to give us that bad this demonstrates our capacity.

Sammy: Of attraction are commercial attraction everyday we deploy new models, we are improving our portfolio management with all of that business unit segments that we put together for the loan portfolio. I mean traction is also important that I could have all the limits available, but look at the penetration.

Marcelo Noronha: I could have all the limits available, but look at the penetration level that we have in all segments. And soon, I will talk about fee income recurring revenue. Here I have two charts that we also presented last quarter, and here I'm talking about vintage, over 30, but I'm referring to vintages that presented the best correlation of losses in every vintage, four months after credit was granted, which is overdue after, you know, more than 90 days.

Sammy: A level that we have in all segments and soon I will talk about G fee income recurring revenue here I have two charts that we also presented last quarter and here I'm talking about vintages over 30.

Speaker Change: But I'm, referring to vintages that presented the best correlation of losses in every vintage four months after credit was granted what is overdue.

Speaker Change: You know more than 90 days. This dotted line, which is the 100 basis. The average of approvals of 2019 that means prior to the pandemic and here is the line that we use as our own reference.

Marcelo Noronha: This dotted line, which is the 100 base, is the average of approvals in 2019, that means prior to the pandemic, and here is the line that we use as our own reference. So, in mass individuals, we have controlled vintages between 60 and 65% of everything that we approved back in 2019, but we've been gaining traction. Look at the first quarter and then second quarter in the gray bar, how much we evolved, even with that same level of vintages over 30 days. Transcribed by https://otter.ai

Speaker Change: Got.

Speaker Change: In the mess individuals we have controls control vintages between 60, and 65% of everything that we approved back in 2019, but we've been gaining traction look at the first quarter and then second quarter in the Gray bar, how much we evolved even with that same.

Speaker Change: Level of vintages over 30 days four months and the idea here is that this could be slightly.

Speaker Change: Higher so that we will strike the optimal return level in terms of loans.

Speaker Change: I can take.

Marcelo Noronha: I take a little bit more risk here, and then this will give me a very good return in terms of NII, and delinquency is well-behaved going forward. And then I can give you more information about our origination.

Speaker Change: Take a little bit more risk here and then this will give me a very good return in terms of you know NII and delinquency is well behaved going forward and then I can give you more information about our originated we are growing in line with the market.

Marcelo Noronha: We are growing in line with the market. We are growing with a good level of solidity and security, accounts opening. The reference is, again, back in 2019. In terms of growth in the first quarter, SMEs, and I'm talking about mass.

Speaker Change: No we're growing with you know good level of solidity and security.

Speaker Change: Accounts opening you know.

Speaker Change: The reference is again back in 2019 in terms of growth in the first quarter.

Speaker Change: Sami and I'm talking about mass.

Speaker Change: Sure.

Marcelo Noronha: There was more traction in this quarter, but the level is between 60 and 65% of what we used to present in the vintages of 2019. This inflection of the curve is the baseline because it was very low here. It means that the approval rate was very low. We were capturing lower vintages with lower origination, but here we are at the same level of individuals with a drop in delinquency in the next chart, as you can see. Now, I'm moving on.

Speaker Change: Companies It was more traction in this quarter, but the level is.

It's between 60 and 65% of what we used to present in the vintages of 2019. This inflection of the curve is the baseline because it was very low here. It means that the approval rate was very low we were capturing lower vintages with lower origination, but here we are at the same level.

Speaker Change: [noise] of individuals with a drop in delinquency in the next chart as you can see.

Speaker Change: Now moving on.

Marcelo Noronha: Here, I bring this slide to show you probably three things. First of all, how come we were able to deliver a total of release loans of 84 billion in the second quarter of 2024, 34 being through digital channels? And why is it that we believe that we will continue to perform as such in the third and fourth quarters as well?

Speaker Change: Here I I bring this slide to show you.

Speaker Change: Probably three things first of all.

Speaker Change: How come we were able to deliver a total of release loans in the second quarter of 'twenty 'twenty four of 84 billion.

Speaker Change: For being through digital channels and why is it that we believe that we will continue to perform as such in the third and fourth quarters as well, we'd all of these new modeling so stemming the intensive use of machine learning increase in personnel process aimed.

Marcelo Noronha: With all of these new modeling systems and the intensive use of machine learning, increase in personnel, process improvement, and everything else we did, even considering credit card management, not only in terms of middle marketing, but also SMEs of three to... 50 million, I think we saw a change in pre-approved when compared to the second quarter of 2023, starting with a base of 100, that was an increase of 20%. But if we look at the volume, there was a growth of 27% in this sense.

Speaker Change: Movement and everything else, we did even considering credit card management not only in terms of the middle market, but also as a means of three two.

Speaker Change: 50 million I think we.

Speaker Change: There isn't changing preapproved, when compared to the second quarter of 'twenty to 'twenty three.

Speaker Change: Starting with a base of 100 that was an increase of 20%, but if we look at the volume there was a growth of 27% in there says what does that mean it means that with the commercial traction that we have in every segment, including in digital channels naturally we are delivering a client NII.

Marcelo Noronha: What does that mean? It means that with the commercial traction that we have in every segment, including digital channels, naturally, we are delivering a client NII that is growing and stable, based on that mix that I showed before. But not only based on credit, because that's the main leverage, but also based on liabilities, because in 2024, we noticed growth in our receivables from clients, but the cost was slightly lower when compared to the same period in 2023. But the third piece of information I have here for you is the evolution of the approval rate.

Speaker Change: That is growing stable based on that mix that I showed before but not only based on credit because that's the main leverage but also based on liabilities because in 'twenty 'twenty four we noted grew.

Speaker Change: Growth of our receivables from clients, but the cost was slightly lower when compared to the same period of 2023 but the third piece of information I have here for you.

Speaker Change: Is the evolution of the approval rate.

Marcelo Noronha: This reinstates what I said before, you know, be careful with credit risk, and mix adequate pricing.

Speaker Change: This reinstates, what I said before.

Speaker Change: Be careful with credit risk.

Speaker Change: Mix adequate pricing.

Marcelo Noronha: Models that are much more adequate using transactional data, the use of machine learning, and better ratings, particularly in the individual segment. When we talked about the 2019 Vintages ratings ranging between A, A, and B, we were bringing 61% of approvals, but today the same vintages are bringing between 74% and 75% of approval ratings between A and B. But note that if you look back to June 2023, when you see this red curve, it was in the low range of our approvals.

Speaker Change: Models that are much more adequate using transactional data use of machine learning better ratings, particularly in the individuals' segment. When we talked about the 20th 19 vintages ratings ranging between the a and B we were bringing.

Speaker Change: <unk> 61 per cent of approvals, but to date the.

Speaker Change: The same vintages are bringing between 74 and 75% of approval rates with ratings between the a and b.

Speaker Change: But note that if you look back at.

Speaker Change: To June 'twenty to 'twenty, three where you see this red curve.

Speaker Change: He was in the low range of our approvals our approvals increase on average in June of this year when compared to June of last year. They they grew 25, 7%, meaning that 16% that was 16% lower than all of the approvals back in 2019, even with that traction and the growth that I showed you before.

Marcelo Noronha: Our approvals increased on average in June of this year, when compared to June of last year, they grew 25.7%, meaning that 16%, that was 16% lower than all of the approvals back in 2019, even with that traction and the growth that I showed you before. But also notice that in order to achieve 25.7% in individuals, we grew almost 27%. End.

Speaker Change: But I also noticed that in order to achieve 25, 7% in individuals', we grew almost 27% and.

Marcelo Noronha: For small companies, the approval level is lower, and it is more conservative, and we are very much, you know, with our foot in the ground. Therefore, we are very comfortable and very reassured in terms of what we've been doing with our credit selection and our growth, growing step by step, but moving forward in terms of our credit risk. And so naturally, we go to our NII, which grew 2.8 percent quarter on quarter, reaching $15.6 billion. Natural market NII, given the volatility notice in the past periods, was slightly lower, but we believe that it will grow, but now client NII stood at $15.3 billion, growing 5% quarter-on-quarter. The net interest income in the first quarter of 2024 went to 15.3 in the second quarter. But notice that in the meantime, if we look at our own. Nat NII, we grew up.

Speaker Change: Small companies the approval level was lower as more conservative and we are very much you know with our put in the ground. Therefore, we are very comfortable and very reassured in terms of what we've been doing with our credit selection and our growth go growing step by step, but moving forward in terms of arc.

Speaker Change: Credit risk and so naturally we go to our and I I wish grew 2.8% quarter on quarter, reaching 15.6 billion natural no market NII given the volatility noted in the past periods was slightly lower but we believe that it will grow but now client NII.

Speaker Change: Stood at $15 3 billion growing 5% a quarter encore corridor and.

Speaker Change: The net interest income in the first quarter of 'twenty 'twenty four.

Speaker Change: Went to 15.3 in the second quarter, but notice that in the meantime, if we look at our.

Speaker Change: Net at our NII.

Speaker Change: NII we grew.

Marcelo Noronha: Substantial, and this growth mainly came from our loan growth, but everything was balanced, last margin, payroll loans, and there were other lines that also helped to make up that mix. And also in the corporate segment with that net spread. But look at the NII growth, quarter on quarter, we grew 18.7%. And this is what, you know, moves the needle on our bottom line. And this is what we have in terms of client NII; our delinquency curve is coming down. NPL creation was well under control in line with a previous quarter very close to 100%. But, the coverage ratio over 90 reached 170.

Speaker Change: Substantially and this growth mainly came from a hour.

Speaker Change: Loan growth, but everything was balanced and last margin payroll loans and they were all their lives, but also help to make up that makes and also in the corporate segment with that net spread but look at the NII growth quarter on quarter. We grew 18 point.

Speaker Change: 7% and this is what you know moves the needle in our bottom line and this is what we have in terms of client NII our delinquency.

Speaker Change: Curve is coming down NPL creation, well under control in line with the previous quarter very close to 100% but.

Speaker Change: The coverage ratio over 90 reached 170.

Marcelo Noronha: Now moving on, in terms of our expenses with loan loss provision, we reached $7.3 billion, mainly due to these two reasons. We had improvements in the quality of the vintages and higher efficiency in terms of collection and credit recovery. Explains and justifies our loan loss provisions. And then we come to another area, and this has to do with having the business areas well tractioned. And I'm referring to fee and commission revenue that helps our top line.

Speaker Change: Now moving on in terms of our expenses with loan loss provision. We reached seven 3 billion mainly attributed to these two reasons, we had improvements on all the vintages quality and higher efficiency in terms of collection and credit recovery and theirs.

Speaker Change: Explains and justifies our.

Speaker Change: Loan loss provisions and then we come to another area and this has to do with having the business areas, well traction and I'm, referring to fee and commissions rose revenue that helps our top line and if you look at it they grow almost in all the lines with.

Marcelo Noronha: And if you look at it, they grow almost in all the lines with a highlight for credit operations, 3.5 percent quarter on quarter. And again, this is due to our commercial traction and the level of relationships that we have with our client base at different levels. So we also grow in current accounts, you know, 3.1 percent. And I would draw your attention to asset management. We grew, you know, quarter on quarter, 6.4 percent. And AUM grew to $33 billion when you compare the second quarter, 24, versus the first quarter, 24. And then I will draw your attention again to the card income.

Speaker Change: It highlights two Friday operations, three 5% quarter on quarter and again. This is due to our commercial traction to the level of relationship that we have with our client base at different levels. So we also grow in current accounts, you know three 1% and I draw your attention.

Speaker Change: Two asset management, we grew.

Speaker Change: One quarter of six 4% and <unk> grew to 33 billion. When you compare the second quarter of 24 versus the first quarter of 'twenty four and then I draw your attention again to the card income.

Marcelo Noronha: You know, you saw that our loan portfolio was not growing that much, but we are more conservative in terms of the low-income client, with those that are non-account holders. In terms of the capital market, we grew 12% almost year on year. So with our pricing, risk is lower, and capital markets also grew substantially. It's not absolutely regular, but the growth was quite high.

Speaker Change: You saw that our loan portfolio was not growing that much but we are more conservative in terms of the low income clients and obviously.

Speaker Change: With those that are noncore or non account holder.

Speaker Change: In terms of cap capital market, we grew 12% almost year on year, so with our pricing risk is lower and capital markets also grew substantially it's not absolutely regular irregular but the growth was quite high.

Marcelo Noronha: We're talking about operating expenses. I'd like to draw your attention to our revisiting of the footprint.

Speaker Change: I'm talking about operating expenses.

Speaker Change: For all your attention.

Speaker Change: Two oh, a revisiting of the footprint, we've been doing that very carefully with very disciplined and you can see a client to be thinking has commercial traction growing 1.8 million clients and most of them coming from payroll loans I N S.

Marcelo Noronha: We've been doing this very carefully, very disciplined, and you can see our client base, again, has commercial traction, growing 1.8 million clients, and most of them coming from payroll loans, INSS, public payroll loans, private payroll loans, and a part of this comes from checking account holders, which also grew in the last quarter. And we point to our indicator in the guidance. First half 24 compared to first half 23, up 7.6%, and here I bring you Reconciliation, in some points.

Speaker Change: As public.

Speaker Change: Payroll loans private payroll loan and a part of this comes from checking account holders.

Speaker Change: But also grew in the last quarter and we point to our indicators the guidance first half 'twenty for compared to first half 'twenty three up seven 6%.

Speaker Change: And here to bring you a REIT conciliation.

Marcelo Noronha: Personnel and administrative expenses growing 4.3% or 4.5% first half 24 over first half 23. And this is because of the care and discipline that we've been having in terms of growing our personnel and administrative expenses. If we look at the complete income statement, you will see other expenses that do have an impact on this indicator. This is 4.5% and represents 7.6%, but I bring you an interesting reconciliation just for your assessment.

Speaker Change: Some point, but for now in administrative expenses growing.

Speaker Change: 0.3% or four 5% first half 'twenty four over first half 'twenty three and this was because of the care and discipline that we've been having in terms of growing our personnel and administrative expenses.

Speaker Change: But.

Speaker Change: If we look at the complete income statement you will see other expenses that do have an impact on those indicators. This is four 5% and representing seven 6%, but I bring you an interesting reconciliation.

Speaker Change: For your assessment.

Marcelo Noronha: We are shareholders in all of the companies under Elopar, Livelo, Alelo, Eloveloy, and Cielo, and what we have seen in these companies, for example, Cielo has been doing a lot of transformational work, but they are also investing to grow, to develop their business, and the same goes for Alelo. In these three cases, when we consolidate, we see a two-digit growth If we were to normalize this level of growth, because it will normalize eventually, our indicator would not be 7.6% but rather 6.2%, as a result of this consolidation, which is positive for the growth of these companies.

Speaker Change: We are shareholders.

Speaker Change: All of the companies under Alabama move L. O L. L O L O the Lloyd and CLO.

Speaker Change: And what we have seen in the companies for example.

Speaker Change: Cielo has been doing a lot of transformational work, but they're also investing to grow to develop their business.

Speaker Change: Go for Allo Allo and in these three cases, when we consolidate we see a two digit growth in operating expenses.

Speaker Change: If we were to normalize this level of growth because it will normalize eventually our indicator would not be seven 6%, but rather six 2%.

As a result of this consolidation, which is a positive for the growth of these companies. So this is just a reconciliation to show that our expenses are well under control.

Marcelo Noronha: So this is just a reconciliation to show that our expenses are well under control in the quarter. And then we move to the insurance group, another very strong quarter, net income of 2.2 billion bureaus, 12.7% growth quarter on quarter, 22% ROAE, and this level of revenue from premiums. Country Abuse and Savings Bonds with this level of... And why is this happening?

Speaker Change: In the quarter.

Speaker Change: Then we moved to insurance group, another very strong quarter net income of 2.2 billion bureaus.

Speaker Change: 7% growth quarter on quarter, 22% of our O N E.

Speaker Change: And this level of revenue of premiums.

Speaker Change: Tree abuse in savings bonds with this level of growth.

Speaker Change: And why is this happening why is this growth happening.

Marcelo Noronha: Why is this growth happening? Because of commercial traction, competitive products and services, both in the bank and in the insurance business. This is what explains this growth. There is a phenomenon we'll see in relation to the guidance, which is that in the second quarter of 2023, as a result of the insurance operation, net income in our guidance was $4.8 billion.

Speaker Change: Because of commercial traction competitive products and services, both in the bank and the insurance group.

Speaker Change: This is what explains this growth there is a phenomenon what we'll see in relation to the guidance is that in the second quarter of 2023.

Speaker Change: The result of insurance operations net income.

Speaker Change: Our guidance was $4 8 billion in this quarter at $4 6 billion, but.

Marcelo Noronha: In this quarter, $4.6 billion, but we are taking strides towards Q3 and Q4 to be well within the guidance regarding the results and operations of the insurance group. This is our expectation as well as the expectation of the insurance group. Technical provisions, $382 billion, growing 2.6% quarter on quarter. Our capital remains practically stable at 10 BPS. If we didn't have a market, given the volatility we've seen in recent quarters, we would have 0.24% up. Capital would have grown, even with us growing our loans. And I'll end the figures part with some guidance.

Speaker Change: We are.

Speaker Change: Taking strides towards Q3 in Q4 to be well within the guidance regarding the real votes.

Speaker Change: Operations of the insurance group. This is our expectation as well as the expectation of the insurance group technical provisions of 382 billion growing two 6% quarter on quarter.

Speaker Change: Oh, we're comparable remained practically stable 10 bps.

Speaker Change: We didn't have a mark to market given the volatility we've seen in recent quarters. We would have zero point, 24% up couple would have grown even with we are growing our loan book.

Speaker Change: And the the fingers part with the guidance. So Oh look I think that's it.

Marcelo Noronha: So I'll look at the implicit net income that we decided to deliver, which is a combination of all of these lines. And if you do the math... Our colleagues on the South Side, you will see that we are delivering an implicit potential net income which is superior to the middle of Caida. So we have. Here's some supplementary information, which is net interest income minus expended loan loss provision that will give us an implicit annual indicator with that band, with that range to facilitate your evaluation.

Speaker Change: Income that we decided to deliver which was a combination of all of these lines and if you do the math.

Speaker Change: Our colleagues in the sell side you will see that we are delivering an implicit potential net income which is superior to the middle of the guidance.

Speaker Change: So we have.

Speaker Change: Here are some supplementary information which is.

Speaker Change: Our net interest income minus expanded loan loss provision that will give us an inclusive in annual indicated what that band, but that range to facilitate for evaluation in other words, we continue to pursue each one of the indicators that's our objective.

Marcelo Noronha: In other words, we continue to pursue each one of the indicators. That's our objective. It's not a gift that we wrap on January 1st and open the gift on December 31.

Speaker Change: A gift that we wrap in January 1st in the open that the gift in December 31, no. We continue to pursue these indicators, we believe that they will grow in the.

Marcelo Noronha: No, we continue to pursue these indicators. We believe that they will grow in the NII. You can see that we are growing client NII quarter after quarter. And I draw your attention to the month of June when we grew a little more than the market, but in line with the market. And you can see the trial balance sheets disclosed by the Central Bank.

Speaker Change: NII you could see that we are growing client NII quarter after quarter, and then draw your attention to the month of June when we grow a little more than the market, but in line with the market.

Speaker Change: And you could see the final balance sheets disclosed by the Central Bank did do evaluations than we have July.

Marcelo Noronha: So it's easier for you to see and to realize that this level of growth and everything we've done in May and June will have benefits in the third quarter, which is what we're living through now. You don't capture all the value in Q2, and the growth that we show in Q3 will actually be seen in Q4, and speaking about our transformation project. We have been working with a lot of support. Cassiano is the CDO, and he has the transformation office. They have been working, and he has been leading the team positively.

Speaker Change: So it's easier for you to see and to realize that this level of growth and everything we've done in May and June.

Speaker Change: We'll have benefits in the third quarter, which is where we're living now you don't capture all the value in Q2.

Speaker Change: And the growth that we show in Q3 will be actually you've seen in Q4.

Speaker Change: And speaking about our transformation project.

Speaker Change: We have been working with a lot of discipline.

Speaker Change: I see I know he was the CTO and he has the transformation office they have been working.

He: And he has been controlling the team positively.

Marcelo Noronha: Checking the timeline and the deliveries, we detailed all of the execution here, and everything is underway. The HR people have been working strongly and reading a lot of things, but we delivered a variable compensation plan for the second half, which is more meritocratic, and it fits the expectations of our shareholders, and we had accelerated progress in the credit business unit, as I mentioned with the right pricing. Better processes, better collection performance, and better portfolio management with this.

He: Second the timeline into deliveries and we detailed all of the execution here and everything is underway.

He: So our people have been working strongly with them a lot of things, but we delivered a variable compensation plan for the second half of it which is more meritocratic.

He: And it fits the expectations of our shareholders and we had accelerated progress in the credit business unit as I mentioned with the right pricing.

He: Yes.

He: That's our processes better collection performance better portfolio management.

He: With us.

Marcelo Noronha: Portfolio Management, BU, bringing people from the market and implementing models with a much more intense use of machine learning, transactional data, and all of that leads, as I mentioned before, to better ratings on our loans for individuals and for companies and for SMEs. Our expectation for the second half is that we will start our new affluent segment. Continued expansion of SMEs, and in the case of Bradesco Expresso, I'd like to stress what I already mentioned in the prior call; we have two important platforms in Bradesco Expresso, one through which we relate with our banking correspondents at the check, and they offer a much better experience when we started that delivery in December and January, and we started rolling it out to the whole base. This rollout will be completed now in October.

He: Folio management, B U, bringing people from the market and the implementation of models with a much more intense use of machine learning transactional data and all of that leads as I mentioned before to better ratings in all loans for individuals.

He: And for companies and for F N B.

He: Our expectation for the second half is that we will.

He: Dart, our new affluent segment.

He: Continued extinction of F N B's and in cities that Bradesco expresso I'd like to stress what I already mentioned in prior calls we have two important platform in Bradesco expresso one.

He: Which we relate to with our banking correspondence at the checkout.

He: And they offer a much better experience when we started the delivery in December and January and we started rolling it out to the hoping this rollout will be completed now in October.

Marcelo Noronha: And it is very, very important for our strategy in the mass market clients; on the other side, we have the other platform to capture transactions that are done by a network. We are concluding the rollout of four capture networks, and when this is completely done, what we'll have is, number one, a reduction of operating costs for Prodisco Express for their transactions, and that's the first consequence. The second consequence... will be in a position to make new investments for the capturing network as well as for this new platform that relates to the checkout of the banking correspondence.

He: And it is very very important for our strategy in the mass market clients.

Speaker Change: On the other side you have the other platform to capture a transaction that is done by a network now.

Speaker Change: We are concluding the rollout there will for capturing networks and when this is completely done well will have is number one a reduction of operating cost to produce good espresso for their transactions and that's the first consequence.

Speaker Change: Second consequences.

Speaker Change: Yeah.

Speaker Change: Well be in a position.

Speaker Change: Uh huh.

Speaker Change: To have new investments for the capturing network as well as for the new blood for them that relates with a check out of the banking correspondents.

Marcelo Noronha: All of this will be done much more easily in a much more friendly environment for those front-line people. I went out in the field, visited some small merchants in the countryside of Sao Paulo to see their experience, and I had excellent feedback from the correspondents, from some correspondents that have been our correspondents since 2005. And the third gain, the third consequence, is the experience of the commercial banking correspondent and of the individual clients served through that chamber, and also for FME. The SME platform is also part of this, and it involves CLO. And I now move to my final slide with the conclusions and a summary of everything I've said so far. Number one.

Speaker Change: All of this will be done much more easily.

Speaker Change: Much more friendly environment for those frontline people.

Speaker Change: Went out in the field I did visit some small merchants.

Speaker Change: And in the country outside of Sao Paulo to see their experience and had excellent feedback from the correspondence.

Speaker Change: From some correspondence that would have been correspondence since 2005.

Speaker Change: And the third gain good consequences experience.

Speaker Change: The commercial.

Speaker Change: Banking correspondent and all the individual clients, who are served through that channel.

Speaker Change: So for us in E S.

Speaker Change: The SME platform also is part of this and it involves CLO and I move to my final slide.

Speaker Change: And the summary of everything I've said, so far number one.

Marcelo Noronha: Step by step, solid and safe profitability growth. I spoke about the mix; I spoke about pricing, and about the model. We have revenues growing with a positive inflection of the client NII, as well as fee and income, fee and commission, income, the insurance group, everything positively influencing our results. Focus on that, NII, with a focus on risk-adjusted return. I showed a slide with the livers, the proof, everything we delivered on the loan, 84 billion, approved, and the increase in the NII, client NII, as a result of everything we are doing, and we expect to have better deliveries in 2, 3, and 4. Firm plan execution at an accelerated pace.

My step father them safe profitability growth I spoke about the mix I spoke about pricing and about the model.

Speaker Change: We have revenues growing with a positive inflection of the client NII.

Speaker Change: As well as fee income.

Speaker Change: He and commission income the insurance group everything influencing positively our results focus on that.

Speaker Change: Yeah.

With a focus on risk adjusted return I showed a slide with the Liberals the prove everything we delivered in loan 84 billion.

Speaker Change: Approved an increase in the NII client NII.

Speaker Change: So there's lots of everything we're doing.

Speaker Change: And we expect to have better deliveries in two three and four.

Speaker Change: Plan execution and accelerate it plays piece.

Marcelo Noronha: And lastly, enhance client centricity with a new way to serve, new product formats that will fit different client segments, different than what we did in the past, with other structures, other configurations, and we'll deliver a new app to our clients with a new experience for them as well.

Speaker Change: Of our transformation and lastly, he has the client centricity within your way to serve new product formats that will fit different client segments.

Speaker Change: Different than what we did in the past with other structures other configurations and will deliver a new app to our clients with a new experience for them as well.

Marcelo Noronha: We also make much greater use of Gen AIs to help our BES to interact not only with our employees in various segments but also with our clients. So I spoke about Nishio's group as well, with a great combined ratio below when we had achieved 90 in recent periods, which is an excellent indicator for the sector.

Marcelo Noronha: We also

Speaker Change: We also deliver much greater use of Gen <unk>.

Speaker Change: To help our beer to.

Speaker Change: To interact or not only with O and poised to move several segments, but also without clients.

Speaker Change: So I spoke about the insurance group as well.

Speaker Change: A great combined ratio below.

Speaker Change: 19, when we had achieved at 90 in recent periods, which is an excellent indicator for the for the sector and lastly, if I can thank you one more piece of information from US, which is the hiring of a new officer.

Marcelo Noronha: And lastly, I'd like to bring you one more piece of information, some news, which is the hiring of a new officer for our organization, somebody who will be working with our technology team. This man has vast experience abroad, and vast experience in transformation projects. His experience will be added to Jorge's team with Edilson, Cynthia, and our other colleagues who make up the technology department, linking more and more technology to the business, to the product department, to clients. He will be joining us, most likely by the end of August. That's the expectation.

Speaker Change: Organization.

Speaker Change: Somebody who would be working with our technology team.

Speaker Change: This man has a vast experience abroad, that's experiencing transformation projects.

Speaker Change: His experience will be added to Jose Simo with adults and Cynthia you know other colleagues, who make up the technology department, but linking more and more technology to the business.

Speaker Change: Product department to clients he won't be joining us most likely by the end of August but that's the expectation everything that was arranged and that's often say it will be bringing great.

Marcelo Noronha: Everything is arranged, and this officer will be bringing his grade and experience in other transformation projects to add to our efforts. So I'll end my presentation here. I'd like to thank you for your attention, and I have my colleague Andre Carvalho, our IRO, and Cassiano Scarpelli, who heads the financial department, he's our CFO, and he's also our CTO, and we are available to answer your questions. Thank you very much, Andre, over to you.

Speaker Change: Experience in other transformation project to add to our efforts so that in my presentation here.

Speaker Change: I'd like to thank you for your attention and I have my colleague and our Violet our I R. O N Coffey analyst profiling, who heads the financial Department Who's our CFO and he is also a C. T O and we are always available to answer your questions. Thank you.

Andrea: I much Andrea over to you. Thank.

Marcelo Noronha: Thank you, Cassiano. Thank you, Marcelo. It is a pleasure to be here with you. The CEO of our insurance group is participating remotely, and let us begin the Q&A session. Your questions can be sent in Portuguese or English using three channels; either email to investidores at bradesco.com.br using the WhatsApp number 11974438238, or if you want to point your mobile phone to the QR code, you can send your questions. First question from Renato Meloni with Autonomous.

Andrea: Thank you Kathy I know thank them ourselves.

Andrea: Pleasure to be here with you.

Andrea: Yeah.

Speaker Change: The C O. Upon insurance group is participating remotely and let US begin the Q&A session. Your questions can be sent in Portuguese and English using three channels either email to invested or is after bradesco dot com BR.

Speaker Change: Using the Whatsapp number 11 974438 to three eight.

Speaker Change: Paul If you want to point your mobile phone to the QR code can send your questions first question from Renato Maloney with autonomous Renato.

Speaker Change: Yeah.

Unknown Speaker: Good morning, everyone.

Speaker Change: Good morning, everyone.

Unknown Speaker: So it's good to see you. Thank you for taking my question. My question is about the guidance for this quarter. You added additional information to the guidance, with a much lower expectation of market NIAI, but the guidance was reinforced. So I understand that the current NIA will be low, and provisions will probably be lower. So I'd like to know.

Renato Maloney: So it was good to see you. Thank you for taking my question.

Speaker Change: My question is about the guidance in this quadrant you added an additional information to the guidance.

Speaker Change: With a much lower expectation of market NII, the but the guidance was reinforced so I understand the declines NII well below and provisions will probably be lower I'd like to understand.

Unknown Speaker: Unknown Speaker.

Marcelo Noronha: Perhaps you can explain whether this comes from a greater growth in client NII or lower provisions. And I'd like to understand actually what changed compared to the beginning of the year when you prepared the guidance, when you had a higher market NII expectation. Renato, thank you for the question.

Speaker Change: Perhaps you can explain whether this comes from a greater growth of client NII on lower provisions and I'd like to understand actually what changed compared to the beginning of the year. When you prepare the guidance when you had a higher market NII expectation and that's what thank you for the question I'll start and then my colleagues.

Marcelo Noronha: I'll start and then my colleagues can add. My first answer to you is... We improved our expectations and the outlook. Considering what we had in mind when we prepared the guidance, we're able to deliver more now. You just have to

Speaker Change: Can add.

Speaker Change: Okay.

Speaker Change: My first answer to you is.

Speaker Change: We improved our expectations and be honest look.

Speaker Change: Considering.

Speaker Change: What we had in mind when we prepared the guidance. So we're able to deliver more now.

Unknown Speaker: No, na expectativa, né, de luz.

Speaker Change: Just have two.

Speaker Change: Correct.

Unknown Speaker: Check the expectation of implicit net interest income in the guidance, and you'll see that we have a higher number.

Speaker Change: Check the expectation of Ing once said net interest income into guidance and you'll see that we have a higher number.

Unknown Speaker: and the market in IEA is expected to be better in Q2, stronger than in Q2. And quarter after quarter, we'll continue to increase our growth in AI for our client, NIA, but we cannot separate the provision cost from the growth of NIA. They move together.

Speaker Change: And the market in Iot is expected to be better.

Speaker Change: For Q2.

Speaker Change: Our stronger than Q2 and quarter after quarter will continue to increase our gross NII.

Speaker Change: The client NII, but we cannot separate the provision costs from the growth of them.

Speaker Change: NII.

Renato Maloney: They moved together when you have a better mix with the right pricing adequate modeling and models, we're bringing growing results with safety. Renato. This is how we see this this is my expectation and our friend because generally you can add anything.

Marcelo Noronha: When you have a better mix, the right pricing, adequate modeling, and models, we're bringing growing results with safety, Renato. This is how I see it. This is my expectation. And Andrea and Cassiano, you can add anything. Well, good morning, Renato. I just would like to add to what Marcelo said. I'd like to remind you that in the guidance that Marcelo mentioned during the presentation, we have the implicit net income, that's our reference, and we started adding something more to show how we are looking at our NIM. This is specific guidance on how we set out the ranges which we believe are fundamental to get to this implicit.

Renato Maloney: Well good morning Renato.

Speaker Change: I just would like to add towards myself I'd like to remind you that in the guidance as Marcelo mentioned during the presentation. We have the implicit net income.

Speaker Change: That's all references and we tried to I think something more.

Speaker Change: To show, how we're looking at our N I M.

Speaker Change: Specific items.

Speaker Change: How long how we set out the ranges, which we believe are fundamental to get to this implicit.

Unknown Executive: The traditional guidance, by the way, is annual, so the lines will fluctuate, but it is just a guide for us, an incentive for us. We want everyone to focus on the initial guidance because it is very tangible, it is very strong, so that our people can work with a lot of dedication and more than that. We cannot forget that the light.

Speaker Change:

Speaker Change: Profit in the traditional guidance by the way is annual for the line.

Speaker Change: Will fluctuate, but it is just the north for us any incentive for US we want everyone to focus on the initial guidance.

Speaker Change: Because it is very tangible it is very strong so that people can work with a lot of education and more than that.

Speaker Change: We cannot forget that.

Speaker Change: The line has value.

Unknown Speaker: that will complement the market NII. It can come from the point NII, it can come from very controlled expenses, or in fee and commission income.

Speaker Change: It will complement the market NII it can come from the client NII can come from.

Speaker Change: Very controlled expenses or in fee and commission income.

Unknown Speaker: So we're confident in the implicit profit. It's a basis, and we'll try to deliver more. And just to add, this time we added a slide to the presentation, which is the slide about the leavers.

Speaker Change: We are confident in the implicit profit, it's a base and we will try to deliver more.

Speaker Change: And just the way it's the same but we added a slide to the presentation, which is the site up to leave us and otherwise we present to you measures that have been adopted to accelerate our revenues our revenues don't grow in a linear fashion, we will expand more in the second half compared to the first.

Unknown Speaker: In other words, we present to you measures that have been adopted to accelerate our revenues. Our revenues don't grow linearly... They will expand more in the second half compared to the first half, and Marcelo spoke about the number of clients who are pre-approved, offering up loans to these clients. An increased approval ratio, better management of the client funds, in other words, a number of measures that should help us accelerate revenues and margins in the second half. It's a game we're playing. It is a challenging one for sure, but we continue to pursue the goal.

Speaker Change: Power.

Speaker Change: Alan spoke about the number of clients, who are preapproved offering of loans to these clients.

Speaker Change: Increased approval ratio better management of the client funds in other words, a number of measures that should help us accelerate revenue and margin in the second half. It's a game of playing it is a challenging one for sure but we continue to pursue the goal that's my point.

Speaker Change: Okay.

Unknown Speaker: Moving on to the next question from Eduardo Rosman from BTG: Good morning. Congratulations on the results.

Speaker Change: Moving on to the next question from Eduardo Rosman from BTG.

Eduardo Rosman: Good morning.

Eduardo Rosman: Congratulations on the results.

Unknown Speaker: I have two questions. The first is about your risk appetite. I think the financial conditions of the country, and even abroad, have worsened. I just want to understand how this could eventually change the bank's risk appetite for the next quarters. And my second question...

Eduardo Rosman: I have two questions. The first is about your risk appetite I think the financial conditions of the country and even abroad got worse I just wanted to understand how this could eventually change the bank's risk appetite for the next quarters and my second question.

Unknown Speaker: I'm talking about the recently announced change in variable remuneration. Does that contemplate anything like short-term or mid-term? I know that you are in the midst of an important transition. I just want to understand whether you are contemplating anything for next year.

Speaker Change: It's about the recently announced change in variable remuneration does that contemplate anything like short term or mid term.

Speaker Change: I know that you are in the midst of our important transition I just want to understand whether you're contemplating anything for next year. Thank you Rosemont and thank you for your questions.

Marcelo Noronha: Thank you, Rosman, and thank you for your questions. I would say that our risk appetite is moderate because we have our feet on the ground. You might recall that I showed a chart of the approval rate in 2016. It was 16, and now it's 16% lower than what we used to approve in the past in terms of individuals when we compare today to June of last year vis-a-vis June of this year.

Speaker Change: I would say that.

Speaker Change: Our risk appetite is moderate because we have our feet on the ground.

Speaker Change: I I you might recall that I showed a chart.

Speaker Change: The approval rate in 2016.

Speaker Change: It was 16 now is 16% lower than what we used to have proven the best in it in terms of individuals when we compare today to June of last year vis vis June of this year, but in Smes, that's still lora 17 against 27%.

Marcelo Noronha: But in SMEs, that's still lower, 17 against 27%. And if you look back, remember what I said about mixing in pricing. So we have models, mix, pricing, and, obviously, this composition of risk appetite with a much more severe portfolio management based on SMEs, meaning that we are much more comfortable in terms of what we're doing. But we are still in keeping with the market; we are not, you know, exceeding the level of growth, but we have a lower appetite for SMEs. But as we are monitoring that very closely every single day, maybe tomorrow with a change in the macro landscape, we may adjust our appetite for risk.

And if you look back remember what I said about makes them pricing. So we have models makes pricing and obviously.

Speaker Change: This composition of risk appetite with a much more severe portfolio management based on SME, meaning that we are much more comfortable in terms of what we're doing but it was still in keeping with the market. We are not exceeding the level of growth, but we have a lower appetite in terms of Smes, but.

Speaker Change: As we are monitoring that very closely every single day, maybe tomorrow with a.

Speaker Change: Change in the macro landscape, we may adjust our appetite for risk.

Unknown Speaker: So we are growing with quality and a good level of security and solidity. And the new variable remuneration. I could not summarize that in only two minutes, but I'll try to give you an overall picture. If I take, for instance, the wholesale bank, the managers were already measured on what they generated in their portfolios based on some indicators, but the leadership group was last, linked in terms of the weighted average to the unit itself, but they were more linked to the bank's general business.

We are growing with quality and a good level of security and solidity and the new variable remuneration that I could not summarized that in only two minutes, but I'll try to give you an overall picture.

Speaker Change: If I take for instance, the wholesale bank the managers they were already measure.

Speaker Change: On what they generate in their portfolios based on some indicators.

Speaker Change: But the leadership group was less.

Speaker Change: Linked in terms of the weighted average to the unit itself, but they were more linked to the bank's general business and the bank's general business.

Unknown Speaker: And the bank's general business... remains an important trigger because we have to meet shareholders' expectations, but it's important to look at the leadership group and one of our colleagues who said that the remuneration is a bit higher because they have to take care of a lot of people, so this applies to operating efficiency and areas related to this transformation. So things were done in such a way that is based on merit. So if Andrea delivers more, I have to compensate him better when compared to another colleague that has a good profile, a good track record with the company, but he doesn't deliver as well.

Speaker Change: Remains an important trigger because we have to meet shareholders' expectations, but it's important to look at the leadership group and in one of our colleagues that.

Speaker Change: The remuneration is a bit higher because they have to take care of a lot of people. So this applies to.

Speaker Change: Operating agency efficiency and in areas related to this transformation. So things were done in such a way that is based on.

Speaker Change: On marriage.

Speaker Change: So if a dry eye delivers more I have to compensate him better when compared to another colleague that has a good profile a good track record with the company, but it didn't deliver as well. So his compensation is not the same as in dress compensation.

Unknown Speaker: So his compensation is not the same as Andrea's. But we look at the different business units, and we look at individual performance, but mostly based on what is under that individual's wing of responsibility. And the new variable compensation is already being applied in the second half of the year. Now the next question comes from Tiago Batista from UBS. Tiago, welcome.

Speaker Change: But we look at the different business units and we look at individual performance.

Speaker Change: But mostly based on what is under that individuals' wind our responsibility and the new variable compensation is already being applied in the second half of the year.

Speaker Change: Now the next question comes from Thiago Batista from UBS Tiago welcome.

Unknown Speaker: Congratulations on your results. I have two questions.

Thiago Batista: Congratulations on your results I have two questions the first.

Unknown Speaker: When Noronha presented the strategic plan a few quarters ago, he said that the bank expected to have returns very close to the cost of capital at some point in 2025. When we look at Bradesco's results this quarter, is it possible to say that the rebound of the bank is occurring faster than you anticipated? Or maybe not?

Speaker Change: Not only are when he presented the strategic plan a few quarters ago. He said that the bank are expected to have returns very close to the cost of capital.

At some point in 2021 and we look at Bradesco results. This quarter is it possible to say that the rebound at the bank is occurring faster than you anticipated or maybe not or maybe are we it's in line with the capital or the estimate for 2025 and the second question is about the insurance company.

Unknown Speaker: Or maybe it's in line with the capital or the estimate for 2025? And the second question is about the insurance company. What was the impact of the events in Rio Grande do Sul? How did that affect the bank's results? Or is there still something to be recognized going forward?

Speaker Change: What was the impact of the events in yogurt and to do so how does that affect that the bank's results or there is still something to be recognized going forward.

Speaker Change: Yeah.

Speaker Change: Well.

Marcelo Noronha: Tiago, sorry I said Rosman, no Rosman was the previous question, Tiago. This ROE will be close to capital in 2025, as you mentioned. I think, but the dates may change. I mean, we are not promising to deliver our week close to the capital with very specific, you know. I think we are talking about 2026, but now, what I can tell you... goes in line with what you said. Well, we are moving faster. Yes, we are faster than we previously anticipated.

Unknown Speaker: Tiago

Thiago Batista: Chagal, sorry, I said Rozman rossman was the previous question Thiago.

Speaker Change: That's R O E close to capital in 2025 as you mentioned.

Speaker Change: I think.

Speaker Change: The dates May change I mean, we are not promising to deliver or are we close to capital with very specific.

Speaker Change: No.

Speaker Change: Our view, but we I think we are talking about 'twenty 'twenty six but now what I can tell you.

Speaker Change: Goes in line with what you said well we are moving faster, yes, we are faster.

Speaker Change: Then what we previously anticipated that's why when I talk about the guidance and the net income we were about the guide and so I think that we can deliver.

Marcelo Noronha: That's why when I talk about the guidance and net income, we were above the guidance. So I think that we can deliver something in addition to what was implicit in our net income and the combination of all KPIs. But in terms of your second question, all of the potential impacts for the insurance business that is much more related to the auto segment have already been absorbed in this half year.

Speaker Change: Something in addition to what was implicit in our net income in the combination of all kpis, but in terms of your second question.

All of the potential impacts for the insurance business that is much more related to the auto segment has been already absorbed in this.

Speaker Change: Uh huh.

Speaker Change: Half year and in terms of.

Marcelo Noronha: And in terms of Solidarity with our clients and people in Rio Grande do Sul, not only the bank, there were several actions, but the insurance company paid for all the claims, and everything has already been contemplated in the results of the bank, which were good, so we don't anticipate any impacts going forward. The impact was fully provisioned in our results line. Thank you for your questions. Any more comments? Yvonne is here.

Speaker Change: The.

Speaker Change: Solidarity with our clients and people and heal Grainger, though so.

Speaker Change: Not only.

Speaker Change: The bank what we made there were several actions by the insurance company paid for all the claims and everything has already been contemplated in the results of the bank, which was good. So we don't anticipate any impacts going forward.

Speaker Change: The impact.

It was fully provision in our results line. Thank you for your questions any more comments.

Speaker Change: Yes.

Unknown Speaker: Yvonne, do you have any additional comments, please? Hi, Marcelo, and thank you, Andrea. It's just important to give a little bit more visibility to Tiago that the amount was $165 million gross, $100 million net. That was the impact on the insurance business. And we do not believe that this will be carried over into the next quarter, so there will be no further effect on our P&L. And also, you talked about insurance assistance when we aided our... insurance holders and those that were not insurance holders.

Eva: If I if here Eva do you have any additional comment.

Speaker Change: Please.

Eva: Hi, Marcelo and thank everyone dry, it's just important to give a little bit more visibility to childhood that'd be amount.

Speaker Change: 165 million grows 100 million net that was the impact to the insurance business and we do not believe that this will be carried over in the next quarter. So there will be no further effect in our P&L and also you talked about or the insurance that says.

Speaker Change: Since when we aided our.

Speaker Change: Insurance holders and those that were not.

Unknown Speaker: So the impacts have already been contemplated in the P&L of the second half, and now we just have to look at the second half in a more objective and clear way with all our objectives in line. Thank you, Ivan, very much. Tiago, thank you.

Speaker Change: Insurance holders so the impacts have been already contemplated in the P&L of the second half and now we just have to look at the second half and a more objective and clear way with our all of our objectives in line.

Tiago: We have a very much tiago. Thank you.

Speaker Change: Uh huh.

Unknown Speaker: Thank you, Ivan. Thank you, Tiago. Next question from Bernardo Gutmann with XP.

Speaker Change: Thank you Yvonne and thank Thiago and next question from Bernardo Guzman with SP.

Unknown Speaker: Good morning. Thank you for taking my questions and congratulations on the performance discrepancy. After the important, de-risking work and work to improve the quality of credit, and a resumption of origination of individual loans, I imagine that this growth should be a combination of different segments in addition to the mass market. The bank historically also had this DNA, a strong exposure to low income. It would be interesting if you could elaborate on how you are advancing to the top of the pyramid.

Bernardo Guzman: Good morning.

Bernardo Guzman: Thank you for taking my questions and congratulations on the performance this quarter.

Speaker Change: After the important derisking work and work to improve the quality of credit and over.

Speaker Change: You don't mean origination of individual loans and I imagine that this growth should.

Speaker Change: So it'd be a combination of different segments. In addition to the mass market. The bank. Historically also have the DNA a strong exposure to low income it would be interesting. If you could elaborate on how you are advancing to the top of the pyramid.

Unknown Speaker: The market seems a lot more competitive with some well-established players. Perhaps you could speak about the different digital platforms and other initiatives in financial advisory which you are pursuing to improve your mix and positioning in the individual segments. Thank you, Bernardo. Thank you for the question. You actually mentioned some important conclusions. It is true what you said. You will remember an indicator I showed about credit cards. We are not growing that portfolio a lot.

Speaker Change: The market seems a lot more competitive with some well established players.

Speaker Change: Perhaps you could speak about the different digital platforms and the other initiatives in Peninsula Advisory, which you are pursuing to improve your mix and positioning in the individuals segment.

Speaker Change: Thank you Bernardo Thank you for the question.

Speaker Change: You actually mentioned something important conclusions. It is true what you said you will remember in indicators showed of credit cards, we are not growing that portfolio a lot.

Speaker Change: Okay.

Marcelo Noronha: There's a variation in terms of service provision there, and fee and commission income is low. But we grew a lot more in the high-income portfolio. We grew 12% year on year. So what you said is true. We have substantial growth in mid-income, in high-income, as well as in lower-risk products, which also originated.

Speaker Change: There was a variation in terms of service provision there in fee and commission income, it's Lou but we grew a lot more in the high income portfolio. We grew 12% year on year. So what you said is true we have substantial growth in mid income in high income areas.

Speaker Change: Well as in a lower risk products with ortho originated.

Speaker Change: No.

Marcelo Noronha: but originated by DGO and by Bradesco Express, such as payroll loans. I spoke about the four lines INSS, public, private, payroll loans, and FGTS, payroll loans. So we are growing and all of these audiences with a lot more care when it comes to low income and non-checking account holders when we used to have every current credit card growth. So we are growing quite well in high income, and we are growing now with the adequate lower risk sector. Thank you for the question. Thank you. Next question from Brian Flores with Citibank.

Speaker Change: But oh originated by <unk> and Viper. This go extra so such as payroll loans and spoke about the four lines I NSS public private payroll loans and F. G T S.

Unknown Speaker: [inaudible]

Speaker Change: Payroll loans. So we are growing in all of these audiences and with a lot more care when it comes to low income and non checking account holders.

Speaker Change: When we used to have.

Speaker Change: Every car and credit card growth. So we are growing quite well in high income and we are growing now with the adequate lower risk segments.

Speaker Change: And thank for the question. Thank you and next question from Brian Flores with Citibank.

Speaker Change: Brian.

Brian Flores: Thank you for the opportunity.

Unknown Speaker: Thank you for the opportunity. Noronha, André, and Cassiano.

Brian Flores: No Iranian Andrei and casino Neuro and you mentioned something interesting, we're kind of doing the math here.

Unknown Speaker: Noronha, you mentioned something interesting. We are kind of doing the math here. Sometimes we tend to focus a lot on assets, but on liabilities, we can see that the cost of deposits is improving as a percentage of CDI. So my question is, what are the measures you're taking there? Could you perhaps give us more color on the competitive landscape in this segment and what the trend should be looking forward? Thank you. Thank you, Brian. Cassiano.

Speaker Change #100: So I tend to focus a lot on the outside.

Speaker Change #101: But in liabilities, we can see that the cost of deposits is improving as a percentage of C. D I.

Speaker Change #102: So my question is what are the measures you're taking there could you perhaps give us more color on the competitive landscape in this segment and what should be the trend looking forward. Thank you.

Brian Casiano: Thank you Brian Casiano.

Unknown Speaker: It's a pleasure to tell you what we have adopted. The measures focus mainly on our commercial activities. We have been doing important work in the part of the middle market with our cash and commercial evolution, and that's an important piece of data. And also, our CRM and all of the work that we are doing in terms of working with the database, our data scientists have helped us a lot in terms of low and mid-income clients, deposits, and savings that grew again this quarter, together with the time deposits where we have our CDB and our CDB that remunerates the balance of our general clients.

Speaker Change #104: It's a pleasure to see you well we have adopted.

To measure is focused mainly on our commercial action, we have been doing important work in the part of middle market without cash and the commercial evolution.

Speaker Change #104: And that's an important.

Speaker Change #105: Piece of data and also our CRM and all of the work that we're doing in terms of working with the database. Our data sciences have helped US a lot in terms of low and mid income client deposits savings that grew again this quarter together with the time dip.

Speaker Change #106: That is the way we have a C D b.

Speaker Change #106: A C D b that renewal rates the balance of our general clients. So these three components better optimization of cost and long term funding cost.

Unknown Speaker: So, these three components, better optimization of costs and long-term funding, costs, for companies that gave us a much better balance in terms of our cash and liquidity and brought very interesting gains in our cost of funding. So this municipality, this commercial action that Marcelo spoke about so well in the presentation to be focused on the client, close to the client, it's not just the physical contact face-to-face, it's also the app contact. As Marcelo mentioned, we now have a new app, new functionality, and new concept. So this concept of...

Speaker Change #106: For companies that gave us a much better balance in terms of our cash and liquidity and abroad very interesting gains in our cost of funding.

So the municipality, that's commercial action them or sell them. So well spoke about in the presentation to be focused on the clients close to the clients. It's not just the physical contact face to face. It's also the contact with my fellow mentioned, we now have a new app and new functionality new concept for this call.

Speaker Change #106: Oh.

Unknown Speaker: Presenting Proposals, Presenting Opportunities, this has brought us great results. And in terms of investments, the specialists that Marcelo spoke about, it's not just cash. It's also the assets part that is evolving a lot this quarter. So these are the components. We are focused on the assets line item, yes, but the liabilities line item is also important for our comeback story and profitability.

Speaker Change #107: Presenting proposals presenting opportunities. This has brought us great results.

my fellow: And in terms of investments the specialist that's my fellow spoke about it's not just cash.

Speaker Change #109: It's also the asset part that is evolving a lot this quarter and so this is the components. We are focused on the assets line item, yes, but the liabilities line item. It was also important for our comeback story in profitability.

my fellow: Ryan.

Unknown Speaker: Let me just add to this. We're talking about growing NII, client NII.

Ryan: Let me just add to this we're talking about.

Ryan: Growing NII client NII.

Unknown Speaker: and NIM. We talk about growth and fee and commission income growing and also controlling liabilities. That's the result of commercial activity, mobilization, capacity, and penetration that we have in our client base of different segments. We're talking about high-income retail banks, wholesale banks, mass market, SMEs, and so on and so forth. So thank you for the question.

Ryan: And N I M. We are talking about growth and.

Ryan: Fee and commission income growing an awful controlling liabilities. That's the result of commercial activity mobilization capacity and penetration that we have in our client base of different segments. We're talking about high income retail bank wholesale bank mass market us.

Ryan: And so on and so forth. So thank you for the question. Thank you.

Ryan: Next question from Danielle Vice from Safra Bank.

Unknown Speaker: Next question from Danielle Weiss from Suffer Bay: Good morning, Andrea, Marcelo, and Cassiano. Congratulations on your results.

Danielle Vice: Good morning, and DRAM are selling casino congratulations on the results.

Unknown Speaker: I would like to refer to changing the bank, whether I mean I know you accelerated the footprint 411 movements this quarter, and even then, we see the client line growing, and the individuals segment is growing. So can you tell me about this migration of clients, pains, and learnings? What is your actual pace?

Danielle Vice: I would like to refer to change the bank.

Danielle Vice: Whether I mean, I know you accelerated the footprint for 111 movements this quarter and even then we see you know the client line growing and the individuals.

Speaker Change #112: Segment is growing so.

Speaker Change #113: Can you tell me about this migration of clients pains and learnings.

Speaker Change #114: What is your actual pace would you like to accelerate the pace or maybe stepping to break a little just let me know a little bit about the way you were serving clients today well. Thank you for your question.

Unknown Speaker: Would you like to accelerate the pace or maybe step on the brake a little? Just let me know a little bit about the way you served clients today. Well, thank you for your question. It's just natural, the main concern of the bank, our client base. All the compensation that you can offer, you know, comparing, you know, talking about this pre-transformation or transferring them to another unit or a digital unit.

Speaker Change #115: It's just natural that the main concern of the bank.

Speaker Change #114: Is with <unk>.

Speaker Change #116: Our client base.

Speaker Change #114: Okay.

Unknown Speaker: We're doing that very carefully, but with great discipline, we were able to deliver more than what we expected to see for this period. As we are, you know, being successful in this evolution, we will continue to move at that pace. But we will increasingly use intelligence, dedicated teams, proper studies, in order to minimize any impact on our client base. That's why I mentioned the member of staff who was...

Speaker Change #117: All of the compensations that you can offer you know comparing you know talking about this pre transformation or transferring them to another unit or a digital unit, we're doing that very carefully but with great discipline, we were able to deliver more than what we expected to see for this period. So.

Speaker Change #117: As we are you know being successful windows evolution, we will continue to move in that pace, but we will increasingly use intelligence dedicated teams proper studies in order to minimize any impact to our client base that's why.

Speaker Change #117: I mentioned the number of.

Unknown Speaker: The numbers related to the base growth, part of it comes from current accounts, too. But we are focusing on growing without losing quality. But at the same time, we're going to increase our operating efficiency. That also goes through Bradesco Expresso, something I mentioned during my presentation. I don't know whether Andrea or Cassiano have anything else to add.

Speaker Change #117: The numbers related to the base growth part of it comes from current accounts two but so we are focusing on growing without losing quality, but at the same time, we went to increase our operating efficiency that also goes through Bradesco Expresso something I mentioned during my presentation, I don't know whether and when I look at Seattle have anything else to add I think.

Unknown Speaker: I think. You know, you said it all. I believe that the experience that we were able to translate, and that changed the bank, translates what we did. That's an important lesson.

Speaker Change #118: You know you said it all I believe that the experience that we were able to leverage will translate in that change the bank.

Speaker Change #119: Translates what we did that's an important learning you asked about our lessons learned if you know we translate our desire to be a lateral bank. This has been translated into all of these good news and client Principality client is at the core of everything we do all of the movement that we did.

Unknown Speaker: You asked about our lessons learned. If you know, we translate our desire to be a lateral bank. This has been translated into all of these good news and client principality. The client is at the core of everything you do, all of the movements We did in a very assertive way. We did that preserving that principality.

Speaker Change #119: And a very assertive way, we did that preserving that principality. So we went to increase Friday to use more of our digital for 65, 66% of our account holders use of digital channels. So the experience with of our App has been very good and the Ma.

Unknown Speaker: So we're going to increase Credit to use more of our digital channels. 65 66 percent of our account holders use the digital channels. The experience with our app has been very good, and the main lesson learned comes from the entire leadership of the bank. The entire bank understands the need and the capacity we have to do more, and this is a very important commercial activity. So, in summary, this depicts the movement that right now is very strong, and we can certainly The other aspect is that the service point of the future will not necessarily be like the one we have today. We are removing from the traditional branch the people that serve companies with earnings up to 50 million BRLs, and now they are much more focused, and they work with a more agile operating system with credit experts that sit with companies and help them make more efficient decisions. So we transform that service point into something more objective and with higher productivity. Thank you, Daniel. Next question is from Yuri Fernandez from JP Morgan. Yuri?

Speaker Change #119: Lesson learned it comes from the entire literature for the bank the entire bank understands the need and the capacity we have to do more.

Speaker Change #119: And this is a very important commercial activity and so in summary. This depicts the movement that right now is very strong and we can certainly do the same thing at the same speed next half year and next year. The other aspect is that the service point of the future will not.

Surely be like the one we have today 122 you.

Speaker Change #119: You know points that we inaugurated we are removing from the traditional branch the people that serve companies with earnings up to 50 million barrels and now they are much more focused.

Speaker Change #119: And they work with a more agile operating system with credits experts that sit with companies and help them make more efficient decisions. So we transform that service point.

And into something more objective and with higher productivity. Thank you. Daniel next question from UT Fernandez from JP Morgan.

Speaker Change #119: Judy.

Unknown Speaker: Hi Andre, thank you Noronha and Cassiano, congrats on your results. My question is related to margins, the spread itself. Client NII, there was an inflection, about 10 bips. I think everybody was expecting that. My question relates to the speed of it.

Judy: Hi, Andre Thank you know rolling out an casiano congrats on your results. My question is related to margins the spread itself.

Speaker Change #121: Client NII there wasn't inflection.

UT Fernandez: About 10 bps I think everybody was expecting that my question really relates to the speed of it you talked about SME, but my question is whether it is S me makes us that makes from.

Unknown Speaker: You talked about SMEs, but my question is whether this SME mix is the mix of SMEs. I mean, they were rural; working capital was weak. So my question about spread, you, you would go back to that 9.7 or 10% that you had in the past. At what speed will your margin be resumed, and whether the SME improvement will be good enough to help you accelerate your return? And the second question is about the higher structural cost of risk when compared to your historical numbers.

Speaker Change #123: Very small SME I mean, there were rural working capital was weak. So my question about spread you think that.

Speaker Change #124: You would go back to that nine seven or 10% that you had in the past but.

Speaker Change #125: At what speed your margin will be resumed and whether the mix or the SME improvement will be good enough to help you accelerate your return.

Speaker Change #126: And the second question is about more structural cost of risk when compared to your historical numbers. You said that everything is improving the vintages are improving but cost of credit is still much higher I mean, there were some things in terms of impairment reversal. When you look at the overall picture, but my question is when you look back do you think.

Unknown Speaker: You said that everything is improving, the vintages are improving, but the cost of credit is still much higher. I mean, there were some things in terms of impairment, and reversal, when you look at the overall picture. But my question is, when you look back, do you think that Bradesco could resume the cost of risk that it had in the past, or not? Or maybe things are different now.

Speaker Change #126: Bradesco could resume the cost of risk that you had in the past or not or maybe things are different I mean, you will focus more on high income.

Unknown Speaker: I mean, you will focus more on high incomes. Looking ahead, the next two or three years, what do you see in terms of the cost of credit? And again, congratulations on the results. Thank you, Judy.

Speaker Change #126: Looking ahead, the next two or three years, what do you see in terms of cost of credit and again congratulations on the results. Thank you Judy.

Speaker Change #127: Good morning.

Marcelo Noronha: Well, I'll start with my initial manifesto. With the loss of J.P., the death of the head of J.P. Morgan, my condolences go to his family and to all of the people at J.P. Morgan, with Dara Hams. Recent Loss. In terms of cost of credit, this is our expectation. Go back to the previous numbers in a timeline.

Well I'll start with my initial manifesto.

Speaker Change #128: With a lost of J P of.

Speaker Change #129: Of the the the death of the head of J P. Morgan My condolences go to his family and to all of the people at J P. Morgan.

Speaker Change #129: With their hands.

Speaker Change #131: Recent loss in terms of cost of credit this is our expectation.

Speaker Change #132: Go back to the previous numbers in a timeline. Obviously this will have to mine the mix.

Unknown Speaker: Obviously, this will have to mind the mix. Given the mix and another mix, this is, fit into what we saw in the past. Now, As for spreads and growth curves, this also follows the risk appetite and the mix that we capture because if we Expand the capture of payroll loans, I mean those four lines because when I refer to the payroll loan, there are four lines, and certainly you go back to a higher spread, but we want to have a mix with higher remuneration.

Speaker Change #133: Given that makes an another makes this is.

Speaker Change #133: Fit into what we saw in the past now.

Speaker Change #133: As far as spreads and growth curve. This also follows the risk appetite and the mix that we capture because if we.

Speaker Change #134: Got it.

Speaker Change #134: Expand the capture of payroll alone I mean, those four lines because when I referred to the payroll loan therefore lines and certainly you.

Speaker Change #134: You go back to a higher spread but we want to have a mix with a higher remuneration.

Unknown Speaker: And that is in line with what you said, but with no very specific guidance to get there but, in fact, delivering better results through the combination of the many lines that we have here. So this is what we expect to see. And now, you know, my colleagues can add to what I said if they want. [inaudible] I just have an additional comment.

Speaker Change #135: And that is in line with what you said, but we'd know very specific guidance to get there, but in fact delivering better results.

Speaker Change #136: In the combination of the many lines that we have here. So this is what we expect to see and now you know my colleagues can add to what I said if they want.

Speaker Change #135: Right.

Speaker Change #137: You did.

Speaker Change #138: I just have an additional come into our cost of credit in the second half with three 2%, which is very close to what it was in the past.

Unknown Speaker: Our cost of credit in the second half was 3.2%, which is very close to what it was in the past. Meaning that the main ROE driver this year comes from this reduction in the cost of credit. But going forward, maybe the main ROE driver will be more..., you know, more towards revenue. Next question from Tito Labarta. Quito, the floor is yours.

Speaker Change #139: Meaning that the main driver. This year comes from this reduction in the cost of credit going forward, mainly the main or we driver will be more.

Speaker Change #139: You know.

Speaker Change #139: More towards revenues.

Speaker Change #139: Next question from Tito Lubbock.

Tito Lubbock: She took the floor is yours.

Unknown Speaker: Hi. Good morning, everyone.

Tito Lubbock: Good morning, everyone.

Tito Lubbock: For the call and taking my questions two questions also.

Unknown Speaker: Thank you for the call and taking my questions. Two questions also, if I can. First, on fees, in the quarter, fees were fairly healthy this quarter, particularly loan fees and asset management fees, but also capital market fees jumped quite a bit. Just how do you think about the sustainability of this and the ability to continue to grow your fee income, particularly in the capital market? Anything there to highlight that may have been extraordinary or difficult to sustain for the rest of the year?

Tito Lubbock: First.

Speaker Change #142: And in the quarter.

Speaker Change #142: Yeah.

Speaker Change #142: This quarter, particularly.

Speaker Change #142: Yeah.

Speaker Change #142: Management fees.

Speaker Change #142: A market.

Speaker Change #142: It jumped quite a bit.

Speaker Change #142: Yeah.

Speaker Change #142: Yeah.

Speaker Change #142: To continue to grow.

Speaker Change #142: In particular.

Speaker Change #142: I like that.

Speaker Change #142: Extraordinary.

Speaker Change #142: Got it.

Speaker Change #143: And then a second question on expenses.

Unknown Speaker: And then, second question on expenses, you know, operating, I guess, personnel, and administration, holding up, you know, pretty much roughly in line with inflation, but a big jump in the other, particularly within the other line. If you could just give some more color on that and what drove the increase there on those other expenses, thank you.

Speaker Change #143: Uh huh.

Speaker Change #143: Yes.

Speaker Change #143: Pretty much.

Speaker Change #145: Quite a big jump in.

Speaker Change #145: Oh.

Speaker Change #145: Yeah.

Speaker Change #145: Sure.

Speaker Change #145: Yeah.

Speaker Change #145: And what drove the increase there.

Speaker Change #145: Thank you.

Speaker Change #145:

Unknown Speaker: Thank you to you too.

Speaker Change #145: Thank you.

Speaker Change #145:

Speaker Change #146: I'll start.

Speaker Change #145: No.

Unknown Speaker: The Sufis that you mentioned, Tito. I had a good performance, like I said, during the presentation. We have been delivering this result in a sustainable way, it's recurring. I actually used this word in terms of fees and commission income. The one that grew the least... was credit card payment.

Speaker Change #145: So see you said you mentioned caito.

Speaker Change #147: I had a good performance like I said during the presentation, we have been.

Speaker Change #147: Delivering this.

Speaker Change #147: This result in a sustainable way, it's requiring I actually used the word in terms of fees and commissions income the ones that are the least well.

Speaker Change #147: Was credit card payments.

Unknown Speaker: Of course, capital markets, for example, and you know how the equity market is behaving; it's kind of slow. And this is an important item for the capital markets. And, of course, there is an oscillation, a fluctuation, greater fluctuation coming from IB, the global market that makes up the capital. The market capital line depends a lot on the number of transactions and capital inflows and outflows.

Speaker Change #148: Of course, a couple of markets for example, and you know how the equity market is behaving its kind of slow and this is an important item for the capital markets and of course, there is an oscillation of fluctuation greater fluctuation coming from I B global market.

Speaker Change #148: Make up a couple.

Speaker Change #148: The market couple of lines it depends a lot on the number of transactions and a couple of inflows and outflows.

Unknown Speaker: So there was a more significant variation, but regarding the other revenues, we're growing quite well and in a recurring fashion. This is our expectation to continue to grow fee and commission income better than in prior periods. Regarding personnel expenses, I'll ask our CFO, Cassiano, to answer. Good morning, Tito. And thank you for the question.

Speaker Change #148: So there was a more significant variation, but regarding the other revenues we are growing quite well.

A recurring fashion. This is our expectation to continue to grow fee and commission income better than in prior periods regarding personnel expenses, all I've got to see a focus here I know to answer.

Speaker Change #148: Okay.

Cassiano Scarpelli: As regards personnel and administrative expenses, as Marcelo mentioned, we have strong control over a 4.5% increase. And it's a totally different period because that takes into account the collective bargaining agreement of 2023 now in 2024. So we are very much focused on controlling expenses. The main difference comes from other revenues, operating revenues, and expenses. We had a baseline deviation last year; we had some reversals, gains, and some specific claims that caused the reversal in the past. So the baseline this year is kind of a difficult comparison for this indicator, and Marcelo mentioned something important that I would like to stress here.

Speaker Change #150: Good morning, Tito and thank you for the question as regards to personnel and administrative expenses S. My Fellow mentioned, we have shrunk control about four 5% degrees and it's a totally different period because that takes into account the collective bargaining agreement of 2023 now in 2024.

Speaker Change #150: So we are very much focused on controlling expenses the main difference.

Comes from the other revenues operating revenues and expenses, we had a baseline deviation in the last year, we had some reversal gains of some specific claim that caused the reversal in the past. So the baseline this year, it's kind of a difficult comparison.

Speaker Change #150: And for this indicator.

Speaker Change #150: And myself Lou mentioned something important that I would like to stress here.

Unknown Speaker: When we look at the 7.3 indicator consolidated for Bradesco and when we exclude the companies of Elopar and Cielo, we get to 6.2% within our guidance. We continue to be very focused on that, considering the whole transformation that is happening. And also in terms of personnel, we're still hiring people; we're hiring people for the technology department. We're hiring for credit, for investments, for loan products. And we're hiring a lot of data scientists.

Unknown Speaker: when we look to 7.3

Lou: When we look the 7.3 indicate a consolidator for Bradesco and when we exclude the companies I fell apart and CLO, we got to six 2% within our guidance.

Speaker Change #152: Continue to be very focused on but considering the whole transformation that is happening.

And also in terms of personnel, we are still hiring people, we are hiring people for the technology Department.

Speaker Change #153: Hiring a full credit for in fast men's therefore loan product in their home.

Speaker Change #153: Bring a lot of data scientists.

Unknown Speaker: Still, we were able to balance the result with the adjustment of our footprint. So I think that expenses are under control, and they should bring us a positive bottom line. Thank you, Tito. Next question from Mario Pierry with Bank of America. Good morning.

Speaker Change #153: We were able to balance the result, with the adjustment of our footprint. So I think that expenses are under control and they should bring us a positive bottom line for us. Thank you Tito.

Speaker Change #153: Okay.

Speaker Change #154: Next question from mud Youll be aerie with bank of America.

Speaker Change #153: Okay.

Speaker Change #153: Yeah.

Unknown Speaker: Congratulations on the results. A number of positive trends this quarter. I would like to focus more on the long term. When I look at your efficiency ratio, which is improving, it's still very high, close to 52%. So, Noronha, when you mentioned your strategic plan for the next five years, you never mentioned numbers. So I'd like you to focus on this.

Good morning, Congratulations on the result.

Speaker Change #155: A number of positive trends this quarter I would like to focus more on the long term when I look at your efficiency ratio that is improving it's still very high close to 52% sooner.

Speaker Change #156: So no running up when you mentioned your strategic plan for the next five years.

Speaker Change #157: You never makes a number.

Unknown Speaker: How do you see the evolution of the efficiency ratio? And where do you want to be in five years regarding this ratio? My second question is a brief one. I'd like to understand the impact of the BRL depreciation on the growth of credit this quarter.

Speaker Change #158: So I would like you to focus on those how would you see the evolution of the efficiency ratio.

Speaker Change #159: And where do you want to be in five years regarding this ratio. My second question is a brief one and I'm trying to understand the impact of the BRL depreciation in the growth of credit this quarter.

Unknown Speaker: All right, I will ask, well, thank you for both questions, Mario, and actually, I mentioned the number expected for the next period until 2028, and Cassiano was kind of answering, regarding the expenses. So I'll ask Cassiano to more directly answer your question. Hello, Mario.

Speaker Change #160: Alright, I will well thank you for both questions Mario.

Speaker Change #161: Actually I mentioned the number expected for the next periods until 2028 and casino was kind of answering.

Speaker Change #161: Regarding the expenses so I'll ask US you know to more directly answer your question Hello, Mauricio. Thank you for the question.

Cassiano Scarpelli: Thank you for the question. Our operating efficiency ratio is exactly where we want it to be. It had an initial increase, which is natural, given the investments and the transformation expenses. Although we are controlling the personnel line, so it has a higher curve, and as Marcelo mentioned, at the end of the project, we wanted to be close to 40%. That's our target, more towards the end of 2027-28. We understand that in the second half of 2025 and in the year of 2026, we'll be able to improve the efficiency ratio, bringing it down.

Speaker Change #162: Our operating efficiency ratio is exactly where we want it to be.

Speaker Change #163: It has an initial inquiries, which is natural given the investments and the transformation expenses.

Speaker Change #163: Although we are controlling the personnel line. So it has a high yield curve.

Michel: And as Michel mentioned.

Michel: At the end up the project, we wanted to be close to 40%. That's what we're trying to get more towards the end of 'twenty 'twenty seven 'twenty eight.

Speaker Change #165: We understand that in the second half of 2025 in the U F. 'twenty 'twenty effects will be able to improve the efficiency ratio, bringing it down.

Cassiano Scarpelli: The most important thing is that we are on this ascending curve, which was defined, designed, studied, and ratified. And then it will start descending in 2025 or 2026, so we'll land at around 40% by 2028. So we are very pleased because we are following the plan that we have in the transformation project. Thank you, Cassiano.

Speaker Change #165: The most important thing is that we are in this are sending curve, which was defined design studied and ratified.

Cristiano: And then it will start just sending in 'twenty 'twenty five 'twenty 'twenty four will land at around 40% by 2028. So we're very pleased because we are following the plan that we have in the transformation project. Thank you Cristiano, but just imagine when he says please his mommy.

Marcelo Noronha: But you see, Mario, when he says he's pleased, he's momentarily pleased, whenever pleased with a 52% operating ratio. I want to stress that we will pursue this indicator, which is, again, not now. It will not be at the end. It will be in the process.

Speaker Change #166: Really pleased whenever pleased with a 52% operating ratio.

Speaker Change #165: Okay.

Speaker Change #168: I want to stress that we will pursue this indicator, which is again not now it will not be at the end it will be in the in the process.

Unknown Speaker: And as regards the foreign exchange variation, well, it basically hits the wholesale portfolio but didn't have anything relevant in the micro, small, and mid-sized enterprises and the individuals portfolio. But to remind you, we did a lot in trade finance during this period. So the variation is not just based on what we are carrying but based on what we originated, sitting inside the wholesale portfolio looking at SMEs and micro companies and individuals. I think we're doing quite well. So I just wanted to point that out. Thank you, Mario.

Speaker Change #169: And that's because of foreign exchange variation well it basically half the wholesale portfolio.

Speaker Change #170: We didn't have anything relevant.

Speaker Change #170: In the micro small and midsize enterprises and individuals portfolio I'd like to remind you that we produced a lot in trade finance giant this period.

Speaker Change #170: So the variation is not just based on what we are carrying but based on what we originated.

Speaker Change #170: And.

Speaker Change #170: So do you say the wholesale portfolio looking at Smes and micro companies and individuals I think we're doing quite well so I just wanted to.

Speaker Change #171: A point that I think your body.

Unknown Speaker: Next question is from Pedro Leducchi from Itaubibi.

Speaker Change #171: Uh huh.

Speaker Change #171: Next question from Pedro Leduc <unk> from <unk> BBA.

Unknown Speaker: Can you hear us? Yes, yes, I can.

Pedro Leduc: Can you hear US yes, yes I can.

Pedro Leduc: Thank you and Renault Rooney and Cristiano congratulations on the results.

Unknown Speaker: Thank you, Andrea Noronha and Cristiano. Congratulations on the results. I just have a quick follow-up on client NII. There was very nice growth in the quarter, but you talked a lot about the mix. We also see a lot of spread. And looking at the rates at the end, it's hard to identify that spreads were going up, which led us to understand that there was a component of the funding mix that was quite relevant.

Speaker Change #174: I just have a quick follow up in terms of client NII there was a very nice.

Speaker Change #175: Growth in the quarter, but you talked a lot about the mix and we see also a lot of spread and looking at the rates at the end, it's hard to identify that spreads were going up which led us to understand that there was a component of funding makes that was quite relevant can you. Please help us understand what led you to that too.

Unknown Speaker: Can you please help us understand what led you to that 246 basis points of spread increase so that will allow us to see where the adjustment is so we can make calibrations for the second quarter? My second question is about health insurance. We see an increase in technical provisions.

Speaker Change #176: And 46 basis points of spread increase so that will allow us to see where the adjustment and so we can make calibration for the second quarter. My second question is about health insurance, we see increase in technical provisions.

Speaker Change #175: And.

Unknown Speaker: Whether that could be like a pent-up profit for the second half because I know that you are becoming more strict with the providers. Pedro, thank you for your questions. It's a pleasure to see you again, you and your colleagues. So, let's start with the second question. I would also like to ask Ivan to join us. Ivan, would you like to comment on the second question? Hi, Marcelo. Yes. Gross Reflections

Speaker Change #177: Whether that could be like a pent up profit for the second half.

Yvonne: Because I know that you are becoming more strict with the providers. There. Thank you for your questions. It's a pleasure to see you again, you and your colleagues. So let's start with the second question I will also like to ask Yvonne to join US Eva would you like to comment on the second question.

Yvonne: Uh huh.

Yvonne: Hi, Marcelo yes.

Yvonne: Gross reflects better through the growth of our portfolio.

Unknown Speaker: Pedro, the growth of our portfolio, efficiency, and the financial discipline of our healthcare companies reflect the good times that we are experiencing in the post-pandemic period, so the increase in the number of clients and a prospective view, in terms of giving a higher degree of comfort to our clients is what allowed us to, I think. The connection is poor, and the image was frozen.

Yvonne: The efficiency and the financial discipline of our health care companies. They reflect the good moment that we are experiencing in the post pandemic period.

Speaker Change #179: So that the increase in number of clients and a prospective view.

Speaker Change #179: In terms of.

Speaker Change #179: Giving them.

Speaker Change #179: Higher degree of comfort to our clients is what allowed us to.

Speaker Change #179: Sure.

Speaker Change #180: I think.

Speaker Change #181: The connection is poor and the image was frozen.

Unknown Speaker: So Ivan, we'll come back soon to finish answering the question, but then maybe you can answer the first question, client NII. That's a very good point you mentioned.

Speaker Change #181: So it will come back soon to finish.

Finish answering the question, but and then maybe you can answer the first question.

Unknown Speaker: Client NII. Involves three main drivers, Number 1. Portfolio Growth, Portfolio Growth.

Client NII that is a very good point, you mentioned client NII.

Involves three main drivers.

Speaker Change #181: Number one.

Speaker Change #181: Okay.

Speaker Change #182: Portfolio growth portfolio growth.

Unknown Speaker: brings increased client NII, so the growth of our portfolio. It's a good part of that explanation. The second part that is related to spread, and you noted that quite well, there was a slight growth in client NII spread. It's still very moderate. It's just an inflection point.

Speaker Change #182: Brink's increased client NII, so the growth of our portfolio.

Speaker Change #183: It's a good part of that explanation. The second part of it is related to spread and you noted that quite well there was a slight growth in client.

Marcello Pecina: NII spread is still very moderate its just an inflection point at the beginning of a more robust and relevant improve going forward. So I would like to explain the lower part of growth with client NII and there is a third part which is what Marcello pecina was explaining and this is related to the.

Unknown Speaker: It's the beginning of a more robust and relevant improvement going forward. So I would like to explain the lower part of growth with client and me, and there is a third part which is what Marcelo Cassiano was explaining, and this is related to liability management, you know, client funding. We are being more efficient in terms of dealing with funding from clients. We are giving better results, and we are working better with our partners, and this lowers our funding costs.

Marcello Pecina: Alrighty management, you know fly and funding we are being more efficient in terms of.

Marcello Pecina: Dealing with.

Marcello Pecina: Funding from clients, we are giving better results and we are working better with our mix and this lowers our funding costs. The combination of these three things is what allows us to recover at client NII and as Marcelo was saying we are ready through up many seats that we.

Unknown Speaker: The combination of these three things is what allows us to recover client NII. And, as Marcelo was saying, we have already thrown up many seeds that will allow us to say that we will have a better third quarter when compared to the second quarter. I mean, certainly, you saw the growth of the portfolio with this mix. It's not a big spike in terms of the client NII, but it will show gradual growth. We will, you know, have an even better performance in the third quarter. I think Yvonne has joined us again. Yvonne is back.

Marcelo: Will allow us to see to say that we will have a better third quarter when compared to the second quarter. I mean, certainly you saw the growth of the portfolio with this mix.

Marcelo: If it's not a big spike in terms of the client NII, but it will show a gradual growth we will you know.

Marcelo: Have an even better performance in the third quarter.

Marcelo: I think Eva has joined US again, if I is back.

Unknown Speaker: Hi Marcelo, thank you. I would just like to say that we have had an operating, increased performance of Bradesco Sade in that healthcare segment, and this, obviously, puts us in a comfortable position in terms of the investment we've made in the value chain of the healthcare segment. We do believe in this market, and we're very comfortable, and we have a very positive perspective. And I think I've answered your question, and I'm available further on if you need any further clarification. Thank you. Thank you, Pedro, for the question. The next question is from Eduardo Nishio from Genial.

Eva: Hi, Marcello thing too I would just like to say that we had an operating for increased performance of Bradesco saw would you in that health care segment and this obviously.

Speaker Change #186: It puts us in a comfortable position in terms of the investment we've made and the value chain of the health care segment and we do believe in this market and we're very comfortable and we have a very positive perspective, you and I think I I hope I answered your question and I'm available further on if you need any further clarification. Thank you.

Speaker Change #187: Thank you Pedro for the question. The next question from Eduardo Nishu from Jennie O.

Unknown Speaker: Good morning, Andrea, Cassiano. Good morning, Noronha.

Eduardo Nishu: Good morning on track I see I know good morning Arena.

Unknown Speaker: Congratulations on the results. I have two questions. The first...

Eduardo Nishu: Congratulations on the results I have two questions the first.

Unknown Speaker: It's about your new client platform that you were launching. Could you give me more details about the platform? How do you intend to reduce the cost to serve? I don't know whether that will be only through the reduction in the footprint of the branches, or whether you're contemplating other initiatives that will lower the cost to serve. The second question is simpler.

Eduardo Nishu: It's about your client new client platform that you were launching could you give me more details about the platform. How we how do you intend to reduce the cost to serve you I don't know whether that will be only through the reduction in the footprint of the branches are you contemplating other initiatives that will lower the cost is.

Speaker Change #189: Or let's say the second question is simpler you talked about in place had profit I think analysts have their own calculation on.

Unknown Speaker: You talked about implicit profit. I think analysts have their own calculations on the side, but if you could share with us the numbers that you have in mind, the numbers you used, I think by my calculations it's $18 billion. I just want to make sure whether that number is correct.

Speaker Change #190: On the side, but if you could share with us. The members that you have in mind. The numbers you use I think through my calculations is 18 billion I just want to make sure whether that number is correct. Thank you an issue.

Unknown Speaker: Thank you, Nishio. In terms of our client platform, We have plans that converge here. One is the positioning of Bradesco Espresso because this leads us to a reduction in the cost of serving Espresso, but this is combined with that strategy to be present in the physical world with a variable cost. This is our expectation. But we have other initiatives, not only, you know, the reduction of the footprint, because we want the unit cost of SERP to reach a different level over time.

In terms of our client platform.

Speaker Change #190: We have plans that Tom.

Speaker Change #191: Converge here one is the positioning of Bradesco expresso, because this lead us to a reduction in the cost of service of espresso, but this.

Speaker Change #191: And combined with that strategy to be present in the physical world with a variable cost. This is our expectation, but we have other initiatives not only.

Speaker Change #191: The reduction of the footprint, because we want that unit cost cost of serve reaches a different level with time, but we are.

Unknown Speaker: But we are still working with Tulio's team and other teams from the different areas of the bank to take that to market when the right time comes. So thank you for that first part. And now I'll turn the floor over to Cassiano to answer your second question. Hi Nishio, and thank you again for your question. Well, we usually don't give guidance in this regard, but it seems that the market consensus is quite adequate, 17.5 billion or 18.5 billion.

Speaker Change #192: Still working with Julius team and all their teams from the different areas of the bank to take that to market. When the right time comes so thank you for that first but now I'll turn the floor over to a cashier I know to answer your second question.

Speaker Change #192: Hi, Nishu and thank you again for your question well, we usually don't give guidance in this regard, but it seems that the market consensus is quite adequate 17.5 billion or $18 5 billion. So that range seems to be quite adequate okay.

Unknown Speaker: So that range seems to be quite adequate, okay? I mean, that's very close to your number. Your number was, you know, right on the spot. Thank you, Nishio.

Speaker Change #193: I mean, that's very close to your number your number was.

You know right on the spot.

Nishu: Thank you Nishu.

Unknown Speaker: Next question is from Carlos Gomez Lopez with HSBC.

Nishu: Next question from Carlos Gomez Lopez with HSBC.

Unknown Speaker: Nice to meet you too. Thank you for taking my question. Two questions. One is, we asked earlier about client NIA. I wanted to go back to market NIA.

Speaker Change #195: Thank you for taking my question.

Speaker Change #195: Hum.

Speaker Change #195:

Speaker Change #195:

Speaker Change #195: Yeah.

Speaker Change #195: Yeah.

Speaker Change #195: Go back to market.

Speaker Change #195:

Unknown Speaker: In the past, the bank has taken positions on long, short-term, and short-term interest rates. How would you say the balance sheet is positioned today? And what would be beneficial or prejudicial for you, higher rates or lower rates for the short-term and for the long-term? And the second question is a macro one, the type that Andrea likes.

Speaker Change #195: Okay.

Speaker Change #195: Sure.

Speaker Change #195: How would you say the balance sheet.

Speaker Change #195: Sure.

Speaker Change #195: Okay.

Speaker Change #195: Sure.

Speaker Change #195: Yeah.

Speaker Change #195: For the short term.

Speaker Change #195: And the second question.

Yeah.

Speaker Change #195: Okay.

Speaker Change #196: Uh huh.

Unknown Speaker: We see that Bradesco is gaining momentum and recovering at an inflection point, as you mentioned. And what about Brazil? Do you see that demand is getting stronger or weaker? What is your assessment of the current economic situation in Brazil? We have a lot of negativity in the markets. We wanted to know if you are also cautious. Thank you.

Hum.

Speaker Change #196: Okay.

Speaker Change #196: Thanks, Jim.

Speaker Change #196: Hum.

Speaker Change #196: And do you see that demand could be stronger.

Speaker Change #196: Stronger or weaker.

Speaker Change #196: Okay.

Speaker Change #196: Yes.

Speaker Change #196: In the market.

No.

Speaker Change #196: Okay.

Speaker Change #196: Okay.

Speaker Change #196: Yes.

Unknown Speaker: Carlos, thank you for the questions. I'll ask Cassiano to start.

Speaker Change #196: Carlos Thank you for the questions Alaska coffee I moved to start.

Unknown Speaker: Asking about the market NII. Hi Carlos. Thank you for the question. Good to eat for you. Well, in this quarter, we had a reduction in market NII, and this had basically an effect on trading; the ALM is very balanced. Our pre-fixed future portfolio is in good order, together with our liabilities, which are increasing. That is a natural hedging cycle. There's no other type of specific movement. So it's very well balanced. Obviously, we don't expect any

Speaker Change #197: Asking about market NII.

Speaker Change #197: Hi, Carlos Thank you for the question good to see you.

Well and this quarter, we had a reduction in market NII and has had basically an effect on the trading the a L. M is very balanced.

Unknown Speaker: Our pre-fixed future portfolio is in good order, together with our liabilities that are increasing. That is a natural hedging cycle. There's no other type of specific movement.

Speaker Change #199: Ah, we're pretty thinks the future portfolio is in good order together with our liabilities that are increasing that as a natural hedging cycle theres no other type of specific movement.

Unknown Speaker: So it's very well-balanced. Obviously, we don't expect any strong and fast interest rate increase as happened in the recent past. So we're working with market expectations. If everything is okay, we'll have a healthy ALM in the second half of 24 and, most likely, in the third quarter of 2025. Nothing to really add, but Carlos, our expectation is what Cassiano mentioned. We expect to have two quarters better than the one we've just seen.

Speaker Change #199: So it's very well balanced.

Obviously, we don't expect any strong and fast interest rate increases that happened in the recent past, but we're working with market expectations. If everything is okay, well, how about healthy a L M.

Speaker Change #199: In the second half of 'twenty, four and most likely in the start of 2025.

Speaker Change #199: Nothing to really add but Carlos our expectation is the word casiano mentioned, we expect to have two quarters better than the one with the same that's our expectation in terms of market NII.

Unknown Speaker: That's our expectation in terms of market NII. Andre, you could answer Carlos' second question about the macroeconomic situation in LA. Okay, so what we have seen so far is a strong increase in macro uncertainties, and macro risk, and this is affecting a lot of financial assets, but not so much real activity. Our economists had a slight revision in terms of GDP growth expectations; it was around 2.3%, with a possibility of being something better than that.

Speaker Change #200: Right you could have a color second question about the.

The macroeconomic situation and then I'll let.

Speaker Change #201: So what we have seen so far is the strong increase in the macro uncertainties the macro risk and this is affecting a lot of financial assets, but not so much the real activity our economists.

Speaker Change #202: Right revision in terms of GDP growth expectation it was around two 3%.

Speaker Change #202: With a possibility of being something better than that so 2020 for them.

Unknown Speaker: So the 2020 Forum is a year that has been very little affected in terms of economic activity, not very much impacted by the macro risks that are impacting housing. If that uncertainty continues, well, the CILIC interest rate will remain stagnant for longer. Our economist team expects the CILIC rate to be at 10.5% at least until the end of 2025. And, of course, that removes the vigor from the economy. But basically, in 2025, if the economy is not vigorous, that's not good for the banks. It's not good for those that rely on domestic activity.

Speaker Change #202: It was a year that has been very little factored in trend.

Speaker Change #202: Of economic activity.

Speaker Change #202: Not very much impacted by the macro risks that are impacting the handsets.

Speaker Change #202: That uncertainty.

Speaker Change #203: Continue well the Selic interest rate will remain stagnant for longer I'm economist team expects the selic rate to be at 10, 5% at least until the end of 2025 and of course that removes the vigor from the economy, but basically <unk> 'twenty 'twenty five.

Speaker Change #203: If the economy is not vigorous that's not good for the banks, it's not good for those that rely on on domestic activity, but we'll have to do with it.

Unknown Speaker: We have to deal with it, just like all companies, and we'll take our internal measures to increase efficiency, trying to offset this effect, which is not under our control. Well, I second everything that Andrea mentioned, Carlos. In terms of the outlook, we had an initial outlook of the GDP growing by 2.5%. It was reviewed to 2.3%. It is good growth, in our opinion, for 2024. We have a very low unemployment level.

Speaker Change #204: Like all companies and we'll take our internal measures to increase efficiency trying to offset this effect, which was not under our control.

Speaker Change #204: Well, if I can say everything that Indra mentioned Carlos.

Speaker Change #205: In terms of the outlook, we had an initial outlook of a.

Carlos: GDP growing three 5%. It was reviewed two 2.3%. It is good growth in our opinion for 'twenty 'twenty, four and have a very low unemployment level.

Unknown Speaker: I know that this has consequences for monetary policy. We are following a close exchange rate because that can have an impact on inflation, which is not good or bad for us if we have a potential increase in the interest rate. But with this potential reduction in interest rates in the U.S. market, it's possible we'll see a reversion of that. We'll have to monitor it. We'll have to follow that. But as Andre mentioned, for next year, the growth expectation changes. If we maintain the interest rate, that's okay, and then we'll have lower potential activity in 2025.

Speaker Change #205: And.

Speaker Change #207: I know that this.

Speaker Change #208: Has a consequence in the monetary policy.

Speaker Change #208: We are following of close exchange rate because of that.

Speaker Change #208: Can have an impact on inflation, which was not good bad for us if we have a potential increase in interest rates.

But with this potential reduction of the interest rates in the U S market. It's possible, we'll see a reversion of that well have to monitor well have to follow that but as Ondrej mentioned.

Ondrej: For next year the growth expectation changes.

Speaker Change #210: If the if we maintain the interest rate that's okay.

Ondrej: And then we'll have a lower potential activity in 'twenty 'twenty five in terms of risk appetite.

Unknown Speaker: In terms of risk appetite, we're always with our eyes open. We're monitoring them step by step, and if it's necessary to change the appetite of the bank, we'll do it.

Ondrej: Always with our eyes open and we're monitoring it and step by step and if it's necessary to change the appetite of the bank will do it. Thank you Carlos.

Unknown Speaker: Thank you, Carlos. Okay, we are now closing the Q&A session. Those questions we were not able to answer here will be answered by our Investor Relations team. Before I turn the floor to Marcelo for his final statements, I'd like to remind you that on our Investor Relations website, you can find the presentation that was presented here and a lot of support materials. Marcelo, go ahead.

Speaker Change #211: Okay. We are now closing the Q&A fashion.

Speaker Change #212: Those questions. We were known to April trends are here will be answered by our Investor Relations team before I turn the floor to my fellow to his final statements I'd like to remind you that in our Investor Relations website, you can find the presentation.

fellow: Presented here and a lot of support materials. My fellow go ahead. Thank you I'm trying to think you'll kind of see I know.

Marcelo Noronha: Thank you, Andrea. Thank you, Cassiano. Thank you to all of you who joined us. I would like to thank the sell side team that asked questions. Thank you very much for your interest in our bank. Thank you for your questions. Thank you to the investors that follow us to our clients. I'd like to stress we are always here, available to have meetings with the investors, with the sell-side team, to explain any line of the balance sheet you're interested in, but I share with you a positive outlook. Thank you very much and have a great and blessed week. Thank you.

Speaker Change #214: Thank you to all of you who joined us.

Right I think the sell side the team that ask questions. Thank you very much for your interest in our bank. Thank you for your question. Thank you to the investors that follow us to all clients.

Speaker Change #214: I'd like to stress will always here available to have meetings with investors with the Southside team to explain and you'll end up the balance sheet, you're interested in but I share with you our positive outlook. Thank you very much and have a great and blessed week. Thank you.

Speaker Change #214: Okay.

Yeah.

Speaker Change #214: Yeah.

Speaker Change #214:

Speaker Change #214: Yeah.

Speaker Change #214: Yeah.

Speaker Change #214: [noise].

Speaker Change #214: Goodbye.