Q2 2024 Itaú Unibanco Holding SA Earnings Call

Hello, good morning everyone and thank you for joining this video conference to talk about our earnings.

Unknown Executive: to talk about our earnings for the second quarter of 2024. As usual, we are broadcasting directly from our office at Avenida Faria Lima in Sao Paulo.

Unknown Executive: Today's event will be divided into two parts. First, Milton will take you through our performance and earnings for the second quarter of 2024, and then we will have a Q&A session during which investors and analysts can ask us questions and get into the details with us. Before we get started, I'd like to give you a few pointers to help you make the most of today's meeting.

First, Milton will take you through our performance and earnings for the second quarter of 2024, and then we will have a Q&A session, during which investors and analysts can ask us questions and get into the details with us.

Unknown Executive: For those of you who access this via our website, there are three audio options on screen: the entire content in Portuguese, the entire content in English, or just the original audio. For the first two options, we will have simultaneous translation. To choose your preferred option... Just click on the flag on the top of your screen. Questions can be submitted via WhatsApp. Just click on the button on the screen on the website, or simply send a message to Plus Some Fight 5, 11 93959 1877.

Speaker Change: For those of you who access this via our website, there are three audio options on screen. The entire content in Portuguese, the entire content in English, or just the original audio. For the first two options, we will have simultaneous translation. To choose your preferred option,

Unknown Executive: The presentation we will be making today is available for download on the website screen and, as usual, on our Investor Relations website. I will now hand over the floor to Milton, who will begin the earnings presentation, and then I'll be back to moderate the Q&A session. Milton, the floor is yours.

Speaker Change: The presentation we will be making today is available for download on the website screen and, as usual, on our Investor Relations website. I will now hand over the floor to Milton, who will begin the earnings presentation, and then I'll be back to moderate the Q&A session.

Speaker Change: Milton, the floor is yours. Good morning, everyone.

Milton Filho: Good morning everyone. Welcome to our meeting to talk about the 2024 second quarter earnings. In this presentation, we have primarily tried to provide executive information in order to make more time for a conversation during the Q&A session. Now, let me go straight into the figures to share our results. We reached the double-digit mark in quarterly managerial recurring results of 10.1 billion REAs in the second quarter and posted growth of 3.1% over the first quarter of 2024.

Milton: In this presentation, we have primarily tried to provide executive information in order to make more time for a conversation during the Q&A session. Let me go straight into the figures to share our results.

Milton: We reached the double-digit mark in quarterly managerial recurring results.

Milton Filho: Now, moving on to the bank's profitability, our consolidated return on equity was 22.4%, a quarter-on-quarter growth of 50 basis points, and in Brazil, our ROE was 23.6%, a quarter-on-quarter growth of 100 basis points. I'd like to draw your attention to the fact that we are running with a common equity TRI ratio of 13.1%. If we were to adjust the bank's profitability by the risk appetite level set by our board, which today is not permitted to operate with capital below 11.5%,

Milton: If we were to adjust the bank's profitability by the risk appetite level set by our board,

Milton: Which today is not permitted to operate with capital below 11.5%, we would have posted a consolidated ROE of 24% taking into account all adjustments and ROE of 25.7% in the operation in Brazil.

Milton Filho: We would have posted a consolidated ROE of 24% taking into account all adjustments and an ROE of 25.7% in the operation in Brazil. So the profitability adjusted by Common Equity Tier 1 of 11.5% is 25.7% in Brazil, which is the profitability for the quarter. We have good news regarding the loan portfolio with sound growth that I will comment on later. We have been finding opportunities to grow with quality and a long-term vision by looking at longer-term cycles.

Milton: So the profitability adjusted by Common Equity Tier 1 of 11.5% is 25.7% in Brazil, which is the profitability for the quarter. We have good news regarding the loan portfolio, with sound growth that I will comment on later.

Milton Filho: We reached the 1.3 trillion reais mark during this quarter. Delinquency ratios are within acceptable thresholds, and I think that the delinquency indicator level that we've been working on is just as important as the steep fall that we're posting. Delinquency indicators are lower than pre-pandemic levels, and I'll talk about that later.

Speaker Change: We reached the R$1.3 trillion mark during this quarter.

Speaker Change: Delinquency ratios are within acceptable thresholds and I think that the delinquency indicators level that we've been working on is just as important as the steed fall that we're posting. Delinquency indicators are lower than pre-pandemic levels and I'll talk about that later.

Milton Filho: Commission Fees and Insurance recorded a good quarter and posted high quality growth of 5%. We continued to organically grow our capital base and ended the quarter at Common Equity Tier 1 of 13.1%, a growth of 10 basis points in the quarter. Going into a little more depth, let's talk about the loan portfolio. I'll focus on some key messages.

Speaker Change: I'll give you more details on capital in a little while.

Milton Filho: The individual loan segment grew 1.2% in the quarter, and last quarter, I commented to you that there would still be a de-risking effect going on in the portfolio in the coming quarters. The credit card portfolio was one of the portfolios in which we had to make the biggest credit adjustment. This portfolio remains stable, which is good news because it needs to stop dropping so it can start growing again, and we're already seeing an inflection point for this portfolio this quarter.

Milton Filho: The Personal Loans Portfolio grew 2.3% in the quarter; we also grew 0.8% in Payroll Loans, and in Vehicle Loans, growth was 3.1%, and the growth in the Mortgage Portfolio was 1.6%. The Portfolio of Individuals grew 3.2% in the year, with some more detracting effects, such as the Card Portfolio and the Payroll Loan Portfolio holding back this growth. But, as I said last quarter, we are at the end of the de

Speaker Change: So all the origination effects are already starting to be positive for the portfolio. We'll be able to notice that in the coming quarters.

Milton Filho: The SME portfolio also posted healthy growth in the quarter of 2.7% and has been growing above double digits year over year, posting growth of 12.5%. The large corporates portfolio posted very strong growth of 8.6% in the quarter and 16.3% year over year. I remind you that this includes AFX impact.

Speaker Change: The SME portfolio also posted healthy growth in the quarter.

Speaker Change: of 2.7 percent.

Milton Filho: I'd say that a third of this growth was due to exchange rate volatility, but two-thirds of the growth happened organically, which shows this portfolio's great momentum. And the results for Latin America, which posted growth of 13.3%, are basically explained by the FX effect. Thus, this does not necessarily represent portfolio growth but rather reflects FX fluctuations. As a result, we can see the loan portfolio growth of 8.9% year-over-year, and excluding FEX, growth was 7.1% for the period.

Speaker Change: As a result, we can see the loan portfolio growth of 8.9% year over year and excluding FEX growth was 7.1% for the period. I had told you last quarter that we'd reaffirm the growth set in 2024 guidance and that we'd be able to post high quality growth in the quarters ahead.

Milton Filho: I told you last quarter that we'd reaffirm the growth set in 2024 guidance and that we'd be able to post high-quality growth in the quarters ahead. The market doubted that, but I believe that two Q24 figures prove this dynamic. By looking at the credit card portfolio, for example, we note that it was flat in the quarter but grew 2% year over year. In this context, I'd like to highlight two segments that are key for the bank in terms of both the quality and the number of customers, which are the personality and uniclass segments.

Speaker Change: The market doubted it, but I believe that two Q24 figures prove this dynamic.

Milton Filho: The credit card portfolio in both these two segments grew 3.5% quarter-over-quarter and 17.3% year-over-year. These are middle and high-income segments where we've been focusing a good portion of our growth. We have good news regarding credit origination in all products.

Speaker Change: The credit card portfolio in both these two segments grew 3.5% quarter over quarter and 17.3% year over year.

Milton Filho: We posted quarter-on-quarter growth of 6% in the individual segment, 7% in SMEs, and 23% in the large corporate segment. Year-on-year growth was of 19%, 11%, 21%, and 17%, respectively. This shows our ability to grow and originate credit very strongly with high quality and a long-term vision. This is what we're managing to do.

Speaker Change: We have good news regarding credit origination in all products.

Milton Filho: And digging deeper into the personal loans portfolio, which includes products such as installment loans and overdrafts, 71% of the growth in 2Q24 came from the middle and high-income segments, named uniclass and personality segments. Again, this shows the strength of Itau Unibanco's middle and high-income segments. It's very important to show our ability to grow in segments that still have a lot of room to continue growing, despite our very strong leadership position. With respect to the client's NII, I'd like to make an observation regarding the adjustment in Argentina, which I'll continue to make during the next two quarters. Last year's earnings included seven months of Argentina's results, so we're trying to normalize this effect by excluding Argentina from the analysis.

Speaker Change: and deep diving at the personal loans portfolio, which includes products such as installment loans and overdrafts. 71% of the growth in 2Q24 came from the middle and high-income segments named uniclass and personality segments. Again, this shows the strength of Itau Unibanco's middle and high-income segment. It's very important to show our ability to grow in segments that still have a lot of room to continue growing, despite our very strong leadership position.

Speaker Change: With respect to the client's NII, I'd like to make an observation regarding the adjustment in Argentina, which I'll continue to make during the next two quarters.

Speaker Change: Our last year's earnings included seven months of Argentina's results, so we're trying to normalize this effect by excluding Argentina from the analysis. Taking this and the working capital effect into account, we posted a 7.4% growth in our clients' NII year-over-year.

Milton Filho: Taking this and the working capital effect into account, we posted a 7.4% growth in our clients' NII year over year. As you can see, if we consider the core client's NII in the second quarter of 2024 over the first quarter of 2024 by firstly disregarding the working capital effect, this NII growth would have been even greater since we would also have a drop in working capital in these deltas. The core client's NII grew 2.7% in the quarter, or R$600 million.

Speaker Change: As you can see, if we consider the core clients NII in the second quarter of 2024 over the first quarter of 2024 by firstly disregarding the working capital effect,

Speaker Change: The core client's NII grew 2.7% in the quarter, or R$600 million.

Milton Filho: The product mix was slightly negative for the NII because, as I showed you in the loans portfolio slide, we grew more in the corporate segment than in the individual segment, and within the corporate segment, we grew more in the large corporate segment than in SMEs. This had a slightly negative mixed impact on the NII. On the other hand, volumes more than offset this effect, with a contribution of 400 million reais during the period.

Speaker Change: We grew more in the corporate segment than in the individual segment, and within the corporate segment, we grew more in the large corporate segment than in SMEs. This is the slightly negative mixed impact on the NII. On the other hand, volumes more than offset this effect. With a contribution of 400 million reais in the period, we also have the positive effect of spreads and liabilities margins, in which liabilities margins is the more representative of the two, as it continues to expand as a result of a very strong growth of the bank's liability. Finally, the structured wholesale operations are also having a positive contribution in the other and Latin America line. Even though we see a slight decrease in the consolidated annualized NIEM for the quarter, it is practically sidelined when adjusting for risk.

Milton Filho: We also have the positive effect of spreads and liabilities margins, the latter of which is the more representative of the two, as it continues to expand as a result of a very strong growth of the bank's liability. Finally, the structured wholesale operations are also having a positive contribution in the other and Latin America lines. Even though we see a slight decrease in the consolidated annualized NIEM for the quarter, it is practically sidelined when adjusting for risk.

Milton Filho: The consolidated risk-adjusted annualized NIEM was 5.8% for the fourth quarter of 2023 and the first quarter of 2024, and 5.7% for 2Q24. The provision recognized in Latin America generated this 10 basis points impact on the consolidated NIEM.

Speaker Change: The consolidated risk-adjusted annualized NIEM was 5.8% for the fourth quarter of 2023 and the first quarter of 2024.

Speaker Change: and 5.7% for 2Q24.

Milton Filho: The annualized NIEM in Brazil dropped slightly, but as I always say, the most important indicator is the risk-adjusted NIEM. Therefore, increasing our NIEM and expanding our top line and our portfolio must be done at high quality. Otherwise, there will be a negative impact on the risk-adjusted NIEM.

Speaker Change: The annualized NIM in Brazil dropped slightly, but as I always say, the most important indicator is the risk-adjusted NIM.

Speaker Change: Therefore, increasing our NIM and expanding our top line and our portfolio must be done with high quality, otherwise there will be a negative impact on risk-adjusted NIM. We continue to consistently improve the risk-adjusted NIM. Thus, I would say that this is yet another quarter of good news in terms of our NIM.

Milton Filho: We continue to consistently improve the risk-adjusted NIEM. Thus, I would say that this is yet another quarter of good news in terms of our NIEM. I'd like to pause for a moment to bring back this chart and tell you the reason why I'm bringing it up again. In the second quarter of last year, we showed this data because some analysts asked us how sensitive our NIM was to interest rates. We've always said that we were less sensitive than some analysts were saying.

Speaker Change: I'd like to pause for a moment to bring back this chart and tell you the reason why I'm bringing it up again.

Speaker Change: In the second quarter of last year, we showed this data because some analysts asked us how sensitive our NIM was to interest rates.

Speaker Change: But since this issue keeps coming back, we thought it would be important to show this data again.

Milton Filho: But since this issue keeps coming up, we thought it would be important to show this data again. In this graph, we add the client's NII and the market NII, which is how we manage everything sensitive to interest rates on the balance sheet, whether it is the loan portfolio or market positions. So the first piece of information is that we set the 100 baseline in the fourth quarter of 2019, which was the last quarter before the COVID pandemic.

Speaker Change: So the first piece of information is that we set the 100 baseline in the fourth quarter of 2019, which was the last quarter before the COVID pandemic.

Milton Filho: The second piece of information is the interest rate, which is this black line. It shows how the interest rate has behaved over time. By doing this analysis, we note that NIM is highly stable, while interest rate behavior is very volatile.

Speaker Change: The second piece of information is the interest rate, which is this black line.

Speaker Change: It shows how the interest rate has behaved over time. By doing this analysis, we note that the NIM is highly stable while interest rate behavior is very volatile.

Milton Filho: We note the interest rate rose from its lowest levels in history to the levels we have experienced recently, while both our gross margin and risk-adjusted NIM have been expanding and proving to be much less sensitive to interest rate fluctuations. I think this graph is very intuitive, and it shows our ability to manage all the risk factors of the conglomerate and be able to navigate through greater interest rate volatility cycles with a much lower impact of CDI fluctuation than many imagine. This is why we think it's important to show you this information one more time. And what would this drop be?

Speaker Change: While both our gross margin and risk-adjusted NIM have been expanding and proving to be much less sensitive to interest rate fluctuation.

Speaker Change: I think this graph is very intuitive and it shows our ability to manage all the risk factors.

Milton Filho: These are the first quarters of the pandemic, during which we have recorded very high provisions in the balance sheet, and that's why, in fact, we had a drop in NIMH, but then we posted a very strong recovery over time. This is the message I'd like to share with you. The market NII had a very positive quarter, posting the best quarter in this historic series, both on a consolidated basis and in Brazil. In Latin America, we had a slightly weaker quarter, as you can see, and the capital hedging cost was flat compared with the previous quarters. This quarter's earnings therefore stand out because they were strong as a result of the operation and better risk management, as well as seized some market opportunities that we found. Allowing us to post quality results.

Speaker Change: And what would this drop be? These are the first quarters of the pandemic, during which we recognized very high provisions in the balance sheet, and that's why, in fact, we had a drop in NIMH. But then we posted a very strong recovery over time. This is the message I'd like to share with you.

Speaker Change: The market NII had a very positive quarter, posting the best quarter in this historic series, both on a consolidated basis and in Brazil. In Latin America, we had a slightly weaker quarter, as you can see.

Speaker Change: This quarter's earnings therefore stand out because they were strong as a result of the operation and better risk management.

Speaker Change: Seizing some market opportunities that we found, allowing us to post quality results.

Milton Filho: Moving on to commission fees and insurance revenue, I'll start with credit and debit cards, which grew 0.8% in the quarter. And I'd like to highlight that we disclosed to the market our support for Rio Grande do Sul and our clients impacted by the floods in the region. And now we can see how it affected some balance sheet lines. We exempted those clients from individual and business current account fees, which explains about two-thirds of this drop in current account fees.

Speaker Change: Moving on to commission fees and insurance revenue, I'll start with credit and debit cards, which grew 0.8% in the quarter.

Speaker Change: And I'd like to highlight that we disclosed to the market the support for Rio Grande do Sul.

Speaker Change: and our clients impacted by the floods in the region.

Speaker Change: We exempted those clients from individual and business current account fees.

Speaker Change: which explains about two-thirds of this drop in the current account fees.

Milton Filho: We had a very good quarter in the asset management business. It is important to mention that both the second and fourth quarters usually include a performance fee, which generates some volatility, but we've been able to deliver performance fees both quarter-over-quarter and year-over-year. We remind you that last year was a very difficult year for performance fees, and although this year has not been easy, we have been able to deliver better results for some products.

Milton Filho: We posted major growth for advisory services and brokerage in the quarter, especially in DCM, which posted very strong results. In addition to continuing to expand our individual's brokerage business. Therefore, this business also helps to explain part of this growth in earnings. Year over year, we grew 83.5%, and I remind you that in the second quarter of last year, we were facing a very difficult time with no capital market activities, which means that this is not the best comparison.

Speaker Change: Year over year we grew 83.5% and I remind you that in the second quarter of last year we were facing a very difficult time with no capital market activities which means that this is not the best comparison.

Milton Filho: In terms of results from insurance operations, we continue to expand the top line. We also had the effects of the floods in Rio Grande do Sul in the quarter, which affected the insurance business since it affects retained claims.

Speaker Change: In terms of results from insurance operations, we continue to expand the top line.

Milton Filho: But the quality of the operation and the insurance penetration continues to grow organically at the same pace that we've been growing over the past years. This gives us a very sound picture of commissions and fees and results from insurance operations. Funding through the asset management business was strong and posted an increase of 22% year over year and of 34% comparing the first half of 2024 against the first half of 2023. This is the advantage of having a portfolio of very diverse products and being able to understand what our clients' needs are.

Speaker Change: But the quality of the operation and the insurance penetration continues to grow organically, at the same pace that we have been growing over the past years. This gives us a very sound picture of commissions and fees and results from insurance operations.

Speaker Change: Funding through the asset management business was strong and posted an increase of 22% year-over-year and of 34% comparing the first half of 2024 against the first half of 2023.

Milton Filho: Client Centricity, which has enabled our funding volumes to grow and net new money to grow higher and higher quarter after quarter. The pension funds operation reflects the same levers, with revenue growth of 22.8% in the quarter and net inflows growing 61%. So we have more volume and a good advisory service for our clients. And in investment banking, I already mentioned the strong DCM results. We indeed had a very sound quarter with 27% market share and once again delivered consistent results.

Speaker Change: The pension funds operation reflects the same levers, with revenue growth of 22.8% in the quarter and net inflows growing 61%.

Speaker Change: So we have more volume, good advisory service for our clients.

Speaker Change: We indeed had a very sound quarter with 27% market share and once again delivering consistent results.

Milton Filho: I'll now present the credit quality indicators, starting with the short-term delinquency indicator, the NPL 1590. In Latin America, we had a slight increase in the short-term delinquency indicator explained by one or two corporate groups in the region, which is not worrying us when we analyze the total delinquency ratio and the delinquency ratio in Brazil.

Milton Filho: We see a slight drop in the quarter. 90 days NPL is running at 3% in Brazil, a slight drop compared to the last quarter and at 2.7% in total. Further down, we have the Latin America indicator at 1.4%. As important as it is to analyze the trend, we must also analyze these indicator levels. When comparing the current level with the pre-pandemic one, we can see that we now operate at lower levels.

Speaker Change: We see a slight drop in the quarter.

Speaker Change: A slight drop compared to the last quarter and at 2.7% in total.

Speaker Change: As important as it is to analyze the trend, we must also analyze these indicator levels. When comparing the current level with the pre-pandemic one, we can see that we now operate at lower levels.

Speaker Change: So I believe that this is the most important message to convey. We have been running for some time at levels lower than pre-pandemic.

Milton Filho: We can see this dynamic in the NPL 15-90 for Brazil, which fell 10 basis points quarter over quarter, while the NPL 15-90 for SMEs also fell 20 basis points in the period, which projects a very positive trend. For large corporates, the indicator is at historic lows.

Speaker Change: While the NPL 1590 for SMEs also fell 20 basis points in the period, which projects a very positive trend.

Speaker Change: For large corporates, the indicator is at historic lows.

Milton Filho: 90 days NPL in Brazil remains stable despite the typical rollover of short-term delinquency that happens in the first quarter. 90 days NPL for individuals was 4.2% in the quarter, remaining flat compared to 1Q24, and is lower than the pre-pandemic level, which was at 4.8% in 4Q19. As I've said earlier, these indicator levels are as important as their trend. We've shown that, quarter after quarter, we are operating with high-quality credit indicators, and obviously, this is where we always have to be careful with type 1 and type 2 mistakes.

Speaker Change: 90 days NPL for individuals was 4.2% in the quarter, remaining flat compared to 1Q24, and is lower than the pre-pandemic level, which was at 4.8% in 4Q19.

Speaker Change: Quarter after quarter we are operating with high quality credit indicators and obviously this is where we always have to be careful with the type 1 and type 2 mistakes.

Milton Filho: The type 1 mistake is a credit mistake, which is the kind we don't want to make, and the type 2 mistake is a risk appetite mistake, which is the kind that we have been careful not to make so that we can grow with quality.

Milton Filho: In terms of credit quality, the cost of credit was flat with a growing loan portfolio in the period, as I showed earlier. This led to another decrease in the cost of credit ratio over the loan portfolio, once again reinforcing the high quality of our portfolio. The renegotiated portfolio also fell, nominally and percentage-wise, with the loan portfolio growing.

Speaker Change: This leads to another decrease in the cost of credit ratio over the loan portfolio, once again reinforcing the high quality of our portfolio.

Milton Filho: Its ratio to the total credit portfolio is at 3%, which is good news. The coverage indexes are all very stable, with very little volatility within a very acceptable margin when compared to the time series. There are no points for our attention in these credit indicators.

Milton Filho: Non-interest expenses grew 4.7% quarter-over-quarter in Brazil, noting that the second quarter is typically stronger than the first quarter because of the accounting effect of vacations in the first quarter and some higher investments made in the second quarter. Excluding Argentina, growth was 7.1% year-to-date over year, and consolidated OPEX grew 5.0% in the same period. The most important thing is that the efficiency ratio continues to fall consistently because managing the top line is as important as managing the costs, and it is this dynamic that has been translated into efficiency rates.

Speaker Change: Excluding Argentina, growth was 7.1% year-to-date over year and consolidated OPEX grew 5.0% in the same period.

Milton Filho: This efficiency ratio that we are now disclosing is for the six-month period. But it is important to highlight that the efficiency ratio for the second quarter was the best efficiency ratio of a second quarter in the historical time series. So this was another quarter in which we achieved the best efficiency ratio comparable to the second quarter. At the beginning of the year, when we presented the 2024 guidance, I pointed out that core costs would grow below inflation.

Speaker Change: But it is important to highlight that the efficiency ratio for the second quarter is the best efficiency ratio of a second quarter in the historic time series.

Speaker Change: At the beginning of the year when we presented the 2024 guidance, I pointed out that core costs would grow below inflation.

Milton Filho: In effect, inflation for the last 12 months, measured by the IPCA, is at 4.2%, and core costs grew 3.8%. This shows that we have been able to keep core costs growth below inflation, but without ever leaving aside investments in our organization, in business expansion, in technology, in our digital channels, and in a better experience for our clients. This is what we've been trying to do quarter after quarter. So the main reasons for the increase in the expenses line are the investments we make. All this investment generates results and benefits over time, which is why it is important to analyze the efficiency ratio.

Speaker Change: In effect, inflation for the last 12 months, measured by the IPCA, is at 4.2%, and core costs grew 3.8%.

Speaker Change: This shows that we have been able to keep core cost growth below inflation, but without ever leaving aside investments in our organization, in business expansion, in technology, in our digital channels, and in a better experience for our clients.

Milton Filho: The last slide of the presentation covers capital. Here, the most important thing to show is that we continue to grow organically, and we expanded our capital base by 0.5%, already adjusted for the dividend. Prudential adjustments, which consider the effects of the mark-to-market of securities booked in the shareholders' equity, have consumed 0.2% of capital with all the interest rate volatility in recent months. And the loan portfolio expansion that I was talking about just now consumed 0.2% as well. It's important to remember that the capital appetite of the Board of Directors for the business is 11.5%, and the capital appetite for dividends is 12%.

Speaker Change: The last slide of the presentation covers capital. Here, the most important thing to show is that we continue to grow organically, and we expanded our capital base by 0.5%, already adjusted for the dividends.

Speaker Change: Prudential adjustments, which consider effects of the mark-to-market of securities booked in the shareholders' equity, have consumed 0.2% of capital with all the interest rate volatility in recent months, and the loan portfolio expansion that I was talking about just now consumed 0.2% as well.

Milton Filho: I'm sure that we'll cover this topic during the Q&A session. The most important message is that we are working with a very strong capital base, which allows the bank to continue pursuing growth opportunities as long as capital is not a constraint. We manage capital allocation focusing on high quality and profitability to ensure value creation. We have a very sound capital base, which has been expanding and financing the bank's growth.

Speaker Change: The most important message is that we are working with a very strong capital base.

Speaker Change: which allows the bank to continue pursuing growth opportunities as long as capital is not a constraint.

Speaker Change: We manage capital allocation focusing on high quality and profitability to ensure value creation.

Speaker Change: We have a very sound capital base, which has been expanding and financing the bank's growth. So I understand that this is a very healthy dynamic for the balance sheet, which shows that we ended up with very robust CET1 and Tier 1 indicators.

Milton Filho: So I understand that this is a very healthy dynamic for the balance sheet, which shows that we ended up with very robust CET-1 and Tier-1 indicators. This is the end of our 2Q24 results presentation. I'd like to thank you all once again for participating in another earnings presentation. In this presentation, we did not bring up the guidance, which is naturally reaffirmed.

Speaker Change: This is the end of our 2Q24 results presentation.

Speaker Change: I'd like to thank you all once again for participating in another earnings presentation.

Speaker Change: In this presentation we did not bring up the guidance which is naturally reaffirmed.

Milton Filho: The guidance is not quarterly, it is annual, and we want to be able to share any developments with you. And we are absolutely in line with everything we have committed to since the beginning of the year. You will certainly be the first to know if there's any change in the scenario or vision. Now, I'm going to join Renato for our Q&A so we can discuss our results further. Thank you very much once again for your participation. Cheers.

Speaker Change: The guidance is not quarterly, it is annual, and we want to be able to share any developments with you.

Speaker Change: You will certainly be the first to know if there is any change of scenario or vision.

Speaker Change: Now I'm going to join Renato for our Q&A so we can discuss our results further.

Renato: Thank you very much once again for your participation. Cheers.

Renato Jacob: Thank you, Milton, for your presentation. It was very quick because we just had Ita Day, three hours of initiatives and content about our business. Focus, Tom Rizzo.

Renato: Thank you, Milton, for your presentation.

Renato: It was very quick because we just had Itaú Day, three hours of initiatives and content about our business.

Renato: And we have 13 questions waiting for you here on today's call. Well, let's start the second part of our meeting today, which is a Q&A session.

Renato Jacob: And we have 13 questions waiting. Well, let's start the second part of our meeting today, which is a Q&A session. Now, I remind you that we have two languages. Milton will answer the questions in the languages that are asked, either English or Portuguese. If you need support for translation, you can choose the entirety of the content in Portuguese or English. Besides, you can submit your questions via WhatsApp on the number 11-93-959-1877.

Speaker Change: Now, I remind you that we have two languages.

Milton: Milton will answer the questions in languages that are asked, either English or Portuguese.

Renato: If you need support for translation, you can choose the entirety of the content in Portuguese or English. Besides, you can submit your questions via WhatsApp. The number is 11-93-959-1877.

Renato Jacob: We will start, Milton, with the first question. We have a long list of analysts. We have Renato Meloni from Autonomous.

Renato: Let's...

Renato: Let's start, Milton, with the first question.

Renato Jacob: Thank you, Renato, for taking part in our call. Good morning, everyone. Thank you for the questions. Actually, I wanted to understand what the perspective for acceleration of the portfolio of natural persons for this quarter is, but if you can give us some context regarding the risk that you just mentioned, but also with the comfort that you have to accelerate the origination and all the segments of income. Thank you. Thank you for the question. Okay, to give you a bit more context, let me just find a camera right here.

Speaker Change: We have a long list of analysts. We have Renato Meloni from Autonomous. Thank you, Renato, for taking part in our call.

Milton: Good morning everyone. Thank you for the questions.

Renato Meloni: Actually, I wanted to understand what is the perspective for acceleration of the portfolio of natural persons for this quarter, but if you can give us some context regarding the risking that you just mentioned, but also for the comfort that you have to accelerating the origination and all the segments of income.

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

Speaker Change: Okay, to give you a bit more context, let me just find a camera right there. All right.

Milton Filho: All right. So, to give you a bit of context, de-risking is at the end of the process, as I mentioned in the previous quarter. The 0.35 year on year on that drop in the second quarter, I would like to just say that we're very close to that end. The end of this. Well, we are at the inflection point until the third quarter. We should be close to that.

Speaker Change: I'm just going to give you a little bit more...

Speaker Change: So, to give you a bit of context,

Speaker Change: The rifting is at the end of the process, as I mentioned on the previous quarter.

Speaker Change: The 0.35 year-on-year on that drop on the second quarter, I would like to just say that we're very close to that end, the end of this. Well, we're at the inflection point until the third quarter. We should be close to that.

Milton Filho: So, in the end, we have to clarify something very important. We didn't stop growing. We continue to grow in the portfolio of medium-high income several quarters in a row, but when you look at a few portfolios in the aggregate, for example, credit cards, you have inertia of the portfolios that continue to drop nominally. So you have a strength, a gravitational strength that pulls you down when you have your origination and a portfolio growing in other segments. We're going to lose that negative effect, and we're going to see a positive effect.

Speaker Change: So, in the end, we have to clarify something very important. We didn't stop growing. We continue to grow in the portfolio of medium-high income

Speaker Change: several quarters in a row, but when you look at a few portfolios in the aggregate, for example, credit cards, you have inertia of the portfolios that continue to drop nominally.

Speaker Change: So you have a strength, a gravitational strength that pulls you down when you have your origination and a portfolio growing in other segments. We're going to lose that negative effect and we're going to see the positive effect.

Milton Filho: We should observe year-on-year growth on the portfolios in relation to what we observed in this quarter. This is the central message. We had the opportunity of growing in several businesses, several products, and several segments of income. So you have to be very careful when we say high income or low income. Well, actually, we've seen opportunities in all segments for growing in the correct channel with the correct client. But we have fewer resilient clients in all segments. Whether it's low, medium, or high income, we have to interpret the data well.

Speaker Change: We should observe the year-on-year growth on the portfolios in regards to what we observed in this quarter. This is the central message. We had the opportunity of growing in several businesses, several products, and several segments of income.

Speaker Change: So you have to be very careful when we say high income, low income.

Speaker Change: Well, actually we've seen opportunities in all segments in growing in a correct channel with the correct Clients and we have less resilient clients in all segments But whether if it's low, medium, high income, we have to interpret well the data. That's the important thing, understanding the model

Milton Filho: That's the important thing, understanding the model, the depth of the relationship, and engaging more and more with these clients. So we're looking at the future, and we can see in a positive way the capacity for growth, especially after a good de-risking in a portfolio, but always having, well, an understanding that the level of leverage is still high, and the commitment of the income of the population is still high. So you have to grow up with care.

Speaker Change: The depth of the relationship and engage the more and more these clients So we're looking at the future and we can see in a positive way the capacity of growth especially after the good the risking in a portfolio, but always having

Milton Filho: Growing a portfolio and accelerating, bringing more margin and then returning that, it's not what we do. We have a very disciplined approach. It's a net financial margin, so it's the margin on the products minus the cost of credit, the expenses, and we've defended our net margin, and we are going to continue to expand on the adjusted line for the risk within this discipline. So we see it in a very positive

Speaker Change: Thank you.

Renato Jacob: Renato Jacob

Milton Filho: We can naturally continue with the appetite for growth, quality in the long cycles, and removing the volatility of the portfolio so we can continue to deliver consistent growing results. That's the main message. I was preempting your entrance here, Tito. Thanks for joining us on the call. Thank you very much.

Speaker Change: to signify his thoughts.

Speaker Change: Sweet love.

Speaker Change: because I know the next question comes from Tito Labarta from Goldman Sachs.

Tito Labarta: Thanks for the call and thank you for my question. Actually, a follow-up on loan growth, but more on the corporate side. We saw very good loan growth, both on the large corporates.

Speaker Change: I don't know, part of that was FX, but even without the FX, Origination grew up quite a bit, SME loans also growing at a healthy pace. Just to understand, how do you think about sort of the health of corporates, you know,

Speaker Change: of OECD welcome to the Zoom conference!

Speaker Change: Thank you for your questions.

Milton Filho: Thank you for coming, and thank you for your question. I would say that the growth that we have had in this portfolio, especially in the big companies, has been very, very healthy, and we've been able to find opportunities. We have a very well-capitalized bank, which brings us opportunities to grow the portfolio whenever we find there is an opportunity. The DCM market in Brazil, as you know, is very active.

Speaker Change: which bring us opportunities to grow the portfolio whenever we find there is an opportunity.

Milton Filho: We've been seeing AUM growing strongly, quarter on quarter, and we've been seeing opportunities to deliver more credit to our clients and also to take advantage of being leaders in the DCM market and selling this portfolio throughout the market. So this is kind of a revolving process where we grow the portfolio, we sell it to the market, and we, of course, open the balance sheet to finance clients that don't have access to the DCM market. So in general speaking, although we have all those macro discussions on interest rates, inflation, and VFX, we've been working since 2015 and 2016. We changed the way we managed our portfolio completely.

Speaker Change: to deliver more credit to our clients and also to take the advantage.

Speaker Change: throughout.

Speaker Change: We've been working since 2015 and 2016. We changed completely the way we managed our portfolio. We have a very, very portfolio approach, risk approach for the portfolio. And if you take, just to give an example, if you take the ten largest clients.

Milton Filho: We have a very, very portfolio approach and risk approach for the portfolio. And if you take, just to give an example, if you take the 10 largest clients or the 10 biggest clients in terms of credit, within the bank, we have less than 3.5% of our capital allocated to those clients. So we have strongly reduced the allocation and the concentration of those portfolios, and we have a very healthy balance when you look at all the segments where we are inserted.

Speaker Change: The 10 biggest clients in terms of credit within the bank, we have less than 3.5% of our capital allocated to those clients. So we reduced strongly the allocation, the concentration of those portfolios, and we have a very healthy...

Milton Filho: And if you look at the clients, we're always hearing about this client or that client that may or might be having an issue with credit. We've been having good surprises. We never know, so knock on wood, hit three times, but we've been doing quite well in terms of credit origination and credit management and risk approach. So we are very comfortable.

Speaker Change: When you look at all the segments where we are inserted in.

Speaker Change: And if you look at the clients, we're always hearing this client or that client that may or might be having an issue.

Milton Filho: We do believe there is opportunity. I don't believe that we'll keep the same pace of growth in the big companies, large companies here as we saw in this quarter. We believe that this pace might slow down in the coming quarters.

Speaker Change: In the big companies, large companies here, as we saw in this quarter, we believe that this pace might reduce in the coming quarters.

Milton Filho: But even though they are very healthy, generating a lot of business for the bank, cross-selling, and a very close relationship with our clients. In the SME, we are doing the same. We are seeing opportunity to grow and grow with quality. If you look at the delinquency ratio of our portfolio, we've been reducing the short-term delinquency by 20 basis points this quarter. So very sustainable, very good quality, and very good profitability. So this is key. We're going to keep very focused on capital in value creation at the end of the day, capital allocation, and managing risk. So we are not, and we will never be, trying to do artificial pricing or trying to gain market share artificially.

Speaker Change: So, we are not and we will never be.

Milton Filho: We are very focused. So all this production and these credits that you see on our balance sheet have very good profitability and return on capital. We are always looking, of course, at the relationship we have with those clients where we have a relevant position in investment banking, talking about ECM, M&A, DCM, and also all the other products that we can do with those clients. So we are very comfortable with the health of the portfolio and cautious, of course, always looking at the forecast and the expectations for the economy. If there's any need to adjust the appetite, we will do so, but it's very comfortable, and there has been no need so far to worry with any of this growth. Very high quality and a good, healthy portfolio.

Milton Filho: with Milton. Thanks. Thanks, Tito. And the next question? I'll have it in Portuguese now.

Renato Jacob: Now going back to Portuguese, and we have Rosman from BTG Pax.

Speaker Change: Now, going back to Portuguese, we have Rosman from BTG Pactual.

Unknown Attendee: Good morning, everyone.

Milton Filho: I wanted to steer away from the quarter, and I wanted an update from Juan Itay. Milton, how relevant is Juan Itay for the strategy in the medium term for the bank? Do you expect? Well, are you going to be disappointed if you don't have the success you want, or is this just an option for your case study? Okay. Thank you, Rosman. Thank you for the question. I'm going to start with the second one because, you know, the entirety of the team is watching us.

Speaker Change: I wanted to steer away from the quarter and I wanted to get an update from Juan Itaú. I wanted, Milton, how relevant is Juan Itaú for the strategy on the medium term for the bank?

Milton Filho: We will. We will be disappointed if we, in fact, cannot advance in a relevant way on what we call the Juanita platform. We started this process; it was very strong work on the infrastructure with a platform, with the unification of management. And now I'm looking at the client holistically, for the whole of the relationship, and there is complexity, and there is a great opportunity as well, as well as complexity. What did we do?

Milton: and on look for the client holistically for the whole of the relations and there is a complexity and there is a great opportunity as well as well as complexity

Milton Filho: We started with a process that I say is family and friends. It's a pilot that was very carefully implemented. We have a number of clients that have been working with this pilot, and all the indicators are very healthy thus far. Just so you know.

Speaker Change: We have a volume of clients that have been working with this pilot and all the indicators are very healthy thus far, just so you know.

Milton Filho: Out of all the clients that we have stimulated, the migration of the cards apps for the super app, 98% migration, 98% is much higher than the expectations and much more than any other migration, because we've done this in a very lightweight and a very soft way, and the client is understanding that there is value being offered. We are very satisfied with the advances, and we will anticipate all the migrations. We had predicted about 15 million clients that were going to migrate to this platform. We are working at a very healthy pace. We don't like to give numbers, but we are probably going to migrate two, two and a half million clients still this year.

Speaker Change: Out of all the clients that we have stimulated, the migration of the apps of cards for the Super App, 98% migration. 98% is much higher than the expectations, and much more than any migration, because we've done this in a very light way.

Speaker Change: In a very soft way. And the client is understanding that there is value being offered.

Speaker Change: We don't like to give numbers, but we are probably going to migrate in two, two and a half million clients still this year.

Milton Filho: Maybe we're going to do double that this year, depending on the rhythm, because there is a lot of quality in what we've done. It's an commitment. It's also an expectation, an estimate given the results that we achieved in the short term. It's a very long journey.

Speaker Change: Maybe we're going to do double that this year, depending on the rhythm, because there is a lot of quality in what we've done. It's a commitment.

Speaker Change: It's also an expectation, an estimate, given the results that we achieved in the short-term period. It's a very long journey. There's still a lot to do. There is relevant evolution in our super apps.

Milton Filho: There's still a lot to do. There are relevant evolutions in our super app. We've benefitted because these mono apps have their own qualities, specific qualities. The fact that you're specialized in a journey gives you more advanced features regarding that journey. But we have the best of both worlds.

Speaker Change: We've benefited because these model apps, they had their own qualities, specific qualities.

Speaker Change: The fact that you are specialized in a journey...

Milton Filho: We are improving the super app with what we had that was the best in the mono product journeys. Also, bringing to the mono product or the credit card, there is a full bank experience with a delivery that is broader and more complete. We are at a very accelerated pace, following up day to day. The way that we do the login with our apps, we've... We don't have just the number of a credit card and the agency.

Speaker Change: But we've...

Speaker Change: I have the best of both worlds. We are improving the super app with what we had that was the best in the monoproduct journeys, also bringing to the monoproduct or the credit card. There is a full bank experience with a delivery that is broader and more complete.

Speaker Change: We are at a very accelerated pace, following up day-to-day, the way that we do the login with our apps.

Speaker Change: We don't have just the number of credit card and the agency, we are looking at the CPF number. These are changes that we could only do with the modernization that we implemented in the bank.

Milton Filho: We are looking at the CPF number. These are changes that we could only do with the modernization that we implemented in the bank. Without that, we couldn't have done so, and all the investments in IT have given us benefits at the core platform of the bank because there are several components or legacy that we're utilizing as well. This is transformational as a journey.

Speaker Change: Without that, we couldn't have done so. And all the investments in IT have given us benefits at the core platform of the bank because there are several components that are legacy that we're utilizing as well.

Milton Filho: I'm raising the bar of expectation. The in-house expectation is very high, but we are at the inception. And the P&L, there is no impact. From the standpoint of migration, the number of clients we have, the expectation of impact is going to be high. And all throughout the next quarters, we are going to measure with more efficacy, more quality, more data, how our cross-sell capacity will improve the relationship with these clients as well. So, high expectations, but still at a ramp-up phase.

Speaker Change: This is transformational as a journey. I'm raising the bar of the expectation. The in-house expectation is very high, but we are at the inception.

Speaker Change: And the PNL, there is no impact.

Speaker Change: From the standpoint of migration, the amount of clients we have, the expectation of impact is going to be high.

Speaker Change: And all throughout the next quarters, we are going to measure with more efficacy, more quality, more data, how our cross-sale capacity will improve the relationship with these clients as well. So, high expectations, but still at a ramp-up phase.

Milton Filho: Thank you, Rosman.

Renato Jacob: Now with us, next question, Gustavo Schroder, BBI. Thank you for your question. Good morning, Milton, and Renato. Congratulations on the record income of $10 billion and a quarter. I wanted to explore the results of Treasury. I think it really is called, it stands out.

Speaker Change: Obrigado!

Rothman: Thank you, Rosman.

Rothman: Now with us, next question, Gustavo Schroder, BBI.

Gustavo Schroeder: Thank you for your question. Good morning, Milton, Renato. Thank you for the opportunity.

Gustavo Schroeder: Congratulations on the record income of 10 billion and a quarter. I wanted to explore the results of Treasury. I think it really called, it stands out

Milton Filho: We've seen the volatility, but there is, you know, $900 million, $1 billion rise, $1.4 billion. So I wanted to understand if you could share with us, Milton, the composition of that data. I wanted to understand if there is a gross up of fiscal benefit of... It's just so we can understand this better. Is this going to be a trend in the next quarter? You know, 900 million, 1 billion. Considering the information available, this is a very volatile line. Well, thank you, Gustavo.

Speaker Change: We've seen the volatility, but there is, you know, $900 million, $1 billion rise, $1.4 billion. So I wanted to understand if you can share with us, Milton.

Speaker Change: The composition of that data, I want you to understand if there is a gross up of fiscal benefit, of...

Speaker Change: Ando you might have, how much do you get from trading, just so we can understand this better, and is this going to be a trend in the next quarter, you know, 900 million, 1 billion, considering the information available, this is a very volatile line.

Milton Filho: It's important to, well, thank you for the question and congratulations. Let me start with the more objective answer. There is no way, there is no artifact, there is no grasshopper.

Speaker Change: Well, thank you, Gustavo. It's important to, well, thank you for the question and congratulations. Let me start by the more objective answer. There is no way, there is no artifact, there is no grass up.

Milton Filho: There is no realization of plus value trying to take the results to the margin. No, none. What we have in that result this quarter is that it was a stronger quarter. Atypical, certainly, if we look at the record, we were running with 1 billion dollars in results in Brazil, and this quarter was a stronger quarter. I think there were many risk factors at play.

Speaker Change: There is no realization of plus value trying to take the results to the margin, no, none.

Speaker Change: What we have in that result in this quarter is that it was a stronger quarter. Atypical, certainly, if we look at the record, we were running with $1 billion in sum in results in Brazil, and this quarter was a stronger quarter.

Milton Filho: We had a higher effect with trading, more with banking. The trading had a relevant impact. It was a stronger quarter. But once again, as you said, there are two predictions that we have to do. If we naturally can deliver this quarter ahead, it's going to be a new outlier. That's not the expectation.

Speaker Change: I think there are many risk factors at play. We had the higher effect with trading, more with the banking. The trading had a relevant impact. It was a stronger quarter. But once again, as you said, there are two predictions that we have to do.

Speaker Change: First, if we naturally can deliver this quarter up ahead, it's going to be a new outlier. That's not the expectation.

Milton Filho: We are trying to find opportunities nonetheless, but that's not really our expectation looking at the quarters ahead. I think it's more reasonable to think about our margin with the market going to the threshold of $1.1 billion. Remember that the cost of the hedge of the index has gone to lower thresholds. We published it as a decimal, but if you open it, it's going to reduce. Given the interest rate differential that we've seen, this has been positive for the cost of the hedge.

Speaker Change: We are trying to find the opportunities nonetheless, but that's not really our expectation looking at the quarters up ahead. I think it's more reasonable to think about our margin with the market going to the threshold of 1.1 billion.

Speaker Change: Remember that the cost of the hedge of the index...

Speaker Change: It has gone to lower thresholds. We published with a decimal, but if you open it, it's going to reduce

Speaker Change: all for listening.

Milton Filho: So the expectation is going back to normalcy with all the difficulty of trying to protect the line for the market, but this was a quarter that was an outlier. And if you look at the DFs, you're not going to see the effects of gross up or plus.

Speaker Change: And if you look at the DFs, you're not going to see the effects of gross up or plus.

Milton Filho: Values are being added that are not recurrent to our balance. It's more of a risk management and opportunities that have come up because of different risk factors in the different tables. It was a quarter that was exceptional, and there was no increase in the limit or the risk appetite, but it was within the framework of the risk of the bank for the market. There was no change in the appetite, in the sense of the limits that are available.

Speaker Change: Values being added that are not recurrent to our balance.

Speaker Change: It's more of a risk management and opportunities that came up because of different risk factors in the different tables. It was a quarter that was exceptional and there was a no increase in the limit or the risk appetite, but it was within the framework of the risk of the bank for the market. There was no change in the appetite in the sense of the limits that are available. There might have had more consumption of the limits, but within the framework.

Speaker Change: That is exactly the same as the previous quarters. So these are quarters that I would say that are comparable

Milton Filho: They might have had more consumption of the limits, but within the framework, that is exactly the same as the previous quarters. So these are quarters that I would say are comparable. Very clear. Thank you. Thank you, Gustavo. Next question. Now on the call is Daniel Vaz from Safran. Welcome. Renato, Milton, thank you and congratulations on the results.

Speaker Change: Very clear. Thank you. Thank you, Gustavo. Next question.

Speaker Change: Now on the call, Daniel Vaz from Saferam. Welcome.

Milton Filho: I wanted to explore the acquisitions. You grew 10% year on year, and in the quarter. It seems to be a maintenance of market share, thinking about the growth of the industry. So, when and how do you expect to grow above the industry? Are you aligned with the strategy of BWFs? And second, I can ask later.

Daniel Vaz: Good morning, Renato, Milton, thank you, and congratulations on the results. I wanted to explore the acquirements. You grew 10% year-on-year, the quarter, it seems to be a maintenance of market share, thinking about the growth of the industry. Thank you.

Daniel Vaz: If and when do you expect to grow above the industry? Are you aligned with the strategy of VitaOX? And second, I can ask later.

Milton Filho: Oh, great. Thank you for the question, because... I wanted to clarify and actually give you feedback on some changes. The line of acquisition is in the line of service and insurance, but you can only see a part of the result of the acquisition business through that line because there is another part of the result that stays in the financial margin with the clients. So remember that there is the invoice for rent, MDR, anticipation, there is the flax, there is the cost of funding that advance, and those lines are distributed.

Speaker Change: of New York.

Speaker Change: Great, thank you for the question.

Milton Filho: So if you try to simplify and get to or take a great look at the line isolatedly, you're not going to get to the result of the acquisition. I don't see the benefit in publishing it this way because it's partial information that doesn't give you the completeness of the whole thing.

Speaker Change: I wanted to clarify something.

Speaker Change: and actually give you a...

Speaker Change: Thank you for your feedback on some changes.

Speaker Change: It's in the service, in the line of service and insurance, but you can only see a part of the result of the business of acquirance.

Speaker Change: through that line.

Speaker Change: because there is another part of the result that stays in the financial margin with the clients.

Speaker Change: So remember that there is the invoice of rent, MDR, anticipation, there is the FLEX, there is the cost of funding of that advance.

Speaker Change: And those lines are distributed. So if you try to simplify and get your take rate looking at the line isolatedly, you're not going to get to the results of the acquiring.

Speaker Change: I don't see the benefit in publishing it this way because it's a partial information that doesn't give you the completeness of the whole thing.

Milton Filho: So we're discussing internally how we're going to publish the acquirance business. Maybe we should get the issuance and the acquirance in the same line to avoid any assumption or any inadequate conclusion. Second point about market share. It's very important in your question in regards to the fact that we don't have an objective, a goal of market share. Market share is a consequence of work, a consequence of getting close to the client, a consequence of a value proposition of an offering of a business that is done with a. Regardless of the fact that we're growing along with the market, and we have a market share of leadership, we don't guide ourselves through market share. That's not what moves our decision-making process in the bank.

Speaker Change: for your time. Thank you. Thank you.

Speaker Change: Discussing internally how we're going to publish the acquirance business. Maybe we should get the issuance and the acquirance in the same line to avoid any assumption or any inadequate conclusion.

Speaker Change: over to market.

Speaker Change: Second point about market share. It's very important your question in regards to the fact that we don't have an objective, a goal of market share. Market share is a consequence.

Speaker Change: of work, consequence of getting close to the client, consequence of a value proposition, of an offering, of a business that is done with a client.

Speaker Change: Regardless of the fact that we're growing along with the market, and we have a market share of leadership, we don't guide ourselves through market share. That's not what moves our decision-making process in the bank.

Milton Filho: What we've tried to do is the integration that was completely, very well done, with incredible quality, and we can see the level of penetration and proximity with the clients that is different. The advantage of having 100% of the bank and having an integrated operation is that you start to talk about the acquiring part of the business as a part of the business. So, in the past, we looked at acquisitions as a separate business.

Speaker Change: What we've tried to do is the integration that was done, completely, very well done.

Speaker Change: With incredible quality and we can see the level of penetration and proximity with the client that is different.

Speaker Change: The advantage of having 100% of the bank and having an integrated operation is that you start to talk about the acquiring.

Speaker Change: It is a pleasure to be here and to be a part of the business. So, in the past, we looked at acquirements as a separate business. All the companies fighting for a business that was a monolinear, that's not our vision anymore. Our vision is client.

Milton Filho: All the companies, you know, fighting for a business that was a monoliner, that's not our vision anymore. Our vision is our clients. Companies, Value Propositions, Offerings, And we don't guide ourselves. Not even if you look at the individual balance sheets and you try to find an assumption of the result, you're not going to do it because a great deal is on the company's results, and that is the content of the balance sheet of the bank.

Speaker Change: Companies, Value Proposition, Offering

Speaker Change: Microsoft Office Word Title Microsoft Office Word Document MSWordDoc Word.Document.8

Speaker Change: And we don't guide ourselves. Not even if you look at the individual balance sheet and you try to find an assumption of the result, you're not going to do it because

Speaker Change: A great deal is with the company's results that is a comment in the balance sheet of the bank. So from now on, we are focusing on the client. We're trying to look at our business in an isolated way as a monoliner. Well, that is wrong.

Milton Filho: So from now on, we are focusing on the client. We're trying to look at our business in an isolated way as a monoliner. Well, that is wrong.

Milton Filho: So, we really believe in the integration. It's working very well with the connection of the business with the teams, and the value proposition for the client is what matters. We migrated from that vision of the product for a long time.

Speaker Change: So we really believe in the integration. It's working very well with the connection of the business, with the teams, and the value proposition for the client is what matters.

Milton Filho: That's an old way of looking at our bank. We have to look at the client now, and that's the need. There is a client that is going to open the relationship through acquiring, but then they want the full bank, you know, and back and forth. There is working capital. They might need cash management. They might need an exchange or a derivative. They need to capture credit cards in their business, whether it's online or physical. So, that's how we've been working with the acquirers in the bank. Can I ask you a second question?

Speaker Change: We migrated from that vision of product for a long time. That's an old way of looking at our bank. We have to look at the client now. And that's the need. There is a client that is going to be

Speaker Change: That is going to open the relationship through acquiring, but then they want the full bank.

Milton Filho: Well, you hired 700 employees for technology. It's a number that really, really stands out. Is there any specific direction that you can give us? I know that you're doing a lot of projects simultaneously, but can you give us some color on that?

Speaker Change: Simultaneously, but can you give us some color on that?

Milton Filho: Daniel, great question. Great question.

Milton Filho: I think that, first of all, we have to look at the mix. If you look at the amount of technology employees and the amount of employees in the bank that doubled in the mix, So simplifying very well, very much, we're running at 17, 18%. We got to the point that we need to be careful because, you know, it's not by getting more people that you're going to deliver more results. You need to take into consideration the interconnection of the platforms. It doesn't matter sometimes that you just get a hundred more employees. You still have monoliths that are not changed to a component structure.

Speaker Change: So simplifying very well, very much, is we're running at 17-18 percent.

Speaker Change: That shows that the bank is changing the way that they are delivering products and services for the clients, the way that we are using the platforms.

Speaker Change: The importance and the relevance of technology having within the organization

Milton Filho: So with all the modernization of the platform, we realize that there is an opportunity to accelerate the value delivery very strongly in the natural persons. We've seen that there is. The acceleration of digital projects that change the experience of the client and the NPS in loyalty. So What Itau has been accelerating, and we have understood that we need to open different fronts now. We did the study, and we concluded that we can add more people, more teams, and technology to accelerate a few processes and a few projects or changes in features, changes in journeys of the client quickly. And this is what we call throughput. In the end, and we decided to yes, increase more people and more staff. It's not 100% for a natural person, but 90% or so.

Speaker Change: The acceleration of digital projects that changed the experience of the client and the NPS in the

Speaker Change: Loyalty

Speaker Change: So Juan Itau has been accelerating.

Speaker Change: And we understood that...

Milton Filho: And that increase is focusing on our client central people, so we can accelerate several of the projects for value delivery for our clients. The value is there, and the results are there to see. Very encouraging. If you start to test our solutions and our now, and you will see this in six months, you're going to see changes in products and context, and product solutions experience value delivery for the client ever more complete than what we have now. More quality within a design language that is very within our own standards and is happening very quickly.

Speaker Change: And this is what we call the throughput.

Speaker Change: At the end. And we decided to, yes, increase more people, more staff. It's not 100% for a natural person, but 90% or so in that increase is focused in our clients, natural persons, so we can accelerate

Speaker Change: Several of the projects for the value delivery for our clients. The value is there and the results are there to see. Very encouraging. If you start to test our solutions and our

Speaker Change: Now and you and it will see this in six months. You're gonna see changes in products and context and product solutions experience value delivery for the client Ever more complete than what we have now

Speaker Change: More quality within a design language that is very within our own standards and happening very quickly.

Renato Jacob: Next question...

Renato Jacob: Next question from Bernardo Guttmann from Expe. Good morning, Renato, Milton, thank you for your

Speaker Change: Thank you, Milton. Next question from Bernardo Guttmann from Expe. Good morning, Renato and Milton. Thank you for this space.

Milton Filho: And congratulations on the results. I wanted you to understand the growth of the levers in the bank but also the payroll loan. It's very important for retail. You reduce that payroll because of the cap on the INSS. So it's very interesting to understand the strategy of this segment, and the appetite of this bank to grow its portfolio. And we've seen ever more aggressiveness from the digital competitors, more aggressive rates that they're practicing. So it would be interesting if you could comment on how you would retain these clients because of the competitiveness of the market. Thank you for the question.

Bernardo Guttmann: Just a question, and congratulations on the results. I wanted you to understand the growth of levers

Speaker Change: It's very important for the retail. You reduce that payroll because of the cap of the INSS.

Speaker Change: So, it's very interesting to understand the...

Speaker Change: strategy of this segment, the appetite of this bank to grow the portfolio, and we've seen ever more aggressiveness with the digital competitors, more aggressive rates that they're practicing. So it would be interesting if you can comment on how you would retain these clients because of the competitiveness of the market. Thank you for the question.

Milton Filho: Congratulations. Now, payroll loans. They have several aspects that we can explore.

Speaker Change: Thank you for the...

Speaker Change: Congratulations. Now, payroll loans.

Milton Filho: First, our portfolio is very, very well distributed. We have the biggest INSS portfolio. We have a very important position in the business. There is a private portfolio where we have a market share that is very relevant, but a very small market.

Speaker Change: They have several angles that we can explore. First, our portfolio is very well distributed. We have the biggest INSS portfolio. We have a very important position with the business. There is a private...

Milton Filho: Regardless of the share being big, it's a smaller portfolio and a portfolio that is similar, which is the public that we've been growing. It was a relevant gap that we had, and we have been growing over the last few years. The payroll of Minas Gerais is key where we've been growing in this segment. It's not just Minas; we've done this with several others.

Speaker Change: The portfolio that we have on market share that is very relevant, but a very small market, regardless of the share being big, is a smaller portfolio, and a portfolio that is similar, which is the public that we've been growing. It was a relevant gap that we had, and we have been growing over the last few years. I think that...

Speaker Change: The payroll of Minas Gerais is key, where we've been growing in this segment. It's not just Minas, we've done this with several others. DINSS

Milton Filho: The INS says that the change of strategy for the bank has been made. I think that the cap of the INSS has brought everyone, first an offering reduction for the market, it's not specific to Itau Unibanco. And we've seen that in the end, we've reduced the impact; we've impacted the consumption of this line, which is cheaper for the retirees because of the cap. If you look at the market, historically, it was always regulated by price.

Speaker Change: Itaunibanco has a change of strategy for the bank. I think that the cap of the INSS brought for everyone first an offering reduction for the market. It's not specific to Itaunibanco.

Speaker Change: And we've seen that at the end, we've reduced the impact, we've impacted the consumption of this line, which is cheaper for the retirees because of the cap.

Milton Filho: Competition always existed, and competition happened at the bank, but also through the correspondent, the distribution channels. So it was a very competitive market from the start. The cap forced a dynamic in the market that you left outside, the retirees that lost access to credit, because given the interest rates, a few specific publics, especially the older folk that have a specific demand, they lost the offer of credit.

Speaker Change: If you look at the market historically, it was always regulated by price. Competition always existed and competition happens at the bank.

Speaker Change: but also through the correspondent, the distribution channels.

Speaker Change: So it was a very competitive market from start. The cap forced a dynamic in the market that you left outside the retirees that lost access to the credit because given the interest rates,

Speaker Change: A few specific publics, especially the older folk that have a specific demand, they lose the offer of credit. That impacted the system, and since we are very relevant in the market, we had an impact. The second comment that I do...

Milton Filho: That impacted the system, and since we are very relevant in the market, we had an impact. The second comment that I make is that we migrated a lot of production. It's not that we changed the whole production, but this was a channel through which, in the past, the external channel represented 50% of the production for us. Now it's more than the inverse.

Speaker Change: We migrated a lot of the production. It's not that we changed the whole production, but this was a channel that in the past, the external channel represented 50% of the production for us. Now it's more than the inverse. And now we grew in the banking channel, our agency, our internal, and not the external, because this price dynamic with the cap is more competitive.

Milton Filho: Now we have grown in the banking channel, our agency, our internal and not our external, because this price dynamic with the cap is more competitive, and you can produce the payroll with a loan with profitability and with the minimum adequate return. You have the correspondent, you have the commission. So besides the natural challenges of the channel, that reduces the correspondent channel, and that's a big impact on the cap. Now there is, in the answer from Daniel, if you remember, the modernization of the platform and the future.

Speaker Change: And you can produce the payroll with a loan with profitability and with the minimum adequate return. When you go to the correspondent, you have the commission.

Speaker Change: So besides the natural challenges of the channel, that reduces the correspondent channel and that's a big impact on the cap.

Daniel Vaz: Now, there is, in the answer of Daniel, if you remember, the modernization of the platform and the features.

Speaker Change: We believe that one of the deliveries and the offerings that we really need to advance is the payroll loan and the digital channel that has been prioritized. The additional investment that we're doing in technology

Milton Filho: We believe that one of the delivery and the offerings that we really need to advance is the payroll loan and the digital channel that has been prioritized. Additional investment that we're doing in technology and the increase in staff go through more products and services, and payroll loans is one of those services that will be addressed with this change of experience for the client. Our vision is that with that, we can be more competitive.

Speaker Change: And the increase in staff goes through more products and services, and payroll loans is one of those services that will be attacked with this change of experience for the client.

Speaker Change: Our vision is that with that we can be more competitive.

Milton Filho: Funding is always an issue for everyone. We are looking at funding that is very competitive, maybe the cheapest cost of funding in relation to the market, but we always work with price to ensure that you're not subsidizing the business, given the cost of opportunity of that cash, which could be the limit, for example, in public bonds. So we set a transfer price that is competitive, and we can see space for growth. We've been growing into different portfolios year on year, but INSS, in fact, has been shrinking.

Speaker Change: Funding, always an issue for everyone.

Speaker Change: We are looking at a funding that is very competitive, maybe the cheapest cost of funding in relation to the market, but we always work with transfer price to ensure that you're not subsidizing the business given the cost of opportunity of that cash.

Speaker Change: That could be the limit, for example, in public bonds. So we do a transfer price that is competitive.

Speaker Change: And we can see space for growth. We've been growing in the different portfolios. Year on year, INSS, in fact, has been reducing.

Milton Filho: But we believe that with this digital offer and with this change of mix, channel, and production, we can continue to be more competitive with this product and all the derivatives and variations. Thank you, Milton.

Milton Filho: But we believe that with this digital offer.

Speaker Change: But we believe that with this digital offer and with this change of mix and channel and production, we can continue to be more competitive in the product and other derivatives and variations.

Speaker Change: Thank you, Milton. Thank you, Bernardo. Next question.

Milton Filho: Thank you, Bernardo. Next question. Brian Flores from Citibank. Good morning. Good morning, Renato, and Milton.

Brian Flores: Brian Flores from Citibank.

Milton Filho: Thank you for the opportunity. A question about revenues and services, that line. Well, there is the specific line that I know that DCM was very strong, as Milton has said, but also I know that you've made a few structural changes. Thank you, Brian.

Brian Flores: Good morning.

Brian Flores: Good morning Renato and Milton. Thank you for the opportunity.

Brian Flores: Question about the revenues and services, that line. Well, there is the specific line that I know that DCM was very strong, as Milton has said, but also I know that you've done a few structural changes.

Speaker Change: Facing the client specifically. So thinking up ahead, how should we think? Close to the 2.5 billion that you delivered in a quarter or a line that is normalized on a downward path. Thank you, Brian .

Milton Filho: Look, this is difficult. This is a line that depends on market conditions. Demand, and capital markets, depend, naturally, on the appetite of our clients to finance themselves and invest, the macro and micro conditions, and several variables that impact the performance of this line. We continue to believe, and we think that we should continue to work with market share. Well, I don't see it as an obsession with the share, but from the standpoint of the capacities that are being installed in our bank and the capacity for the distribution of the reading of the bank, which the bank takes, we have a participation in the market above the fair share in other businesses.

Speaker Change: Look, this is difficult. This is a line that depends on the market conditions. Demand, capital markets.

Speaker Change: depends on, naturally, of the appetite of our clients

Speaker Change: The macro, micro conditions, several variables that impact the performance of this line.

Speaker Change: We continue to believe and we think that we should continue to work with the market share. Well, I don't see it as an obsession for the share. But from the standpoint of the capacities that have been installed in our bank, and the capacity for the distribution of the reading of the bank,

Speaker Change: We have a participation of the market above the fair share in other business. Well, historically, we've always had a leadership position in DCM, and we believe that there is a lot of opportunities for business.

Milton Filho: Well, historically, we've always had a leadership position in DCM, and we believe that there are a lot of opportunities for business. And when the capital markets are open, we observed this, this quarter, this is a line that generates a lot of business because the clients use the windows, there is a close of rates in CDI plus, so the market is very attractive if you want to sell finance and competitive rates, and the market has been absorbing the papers and with CDIs with higher volumes and rates closing. So it's a very healthy dynamic.

Speaker Change: And when the capital markets, they're open, we observed this this quarter, this is a line that generates a lot of business because the clients

Speaker Change: Use the windows, there is a closed...

Speaker Change: And the market has been absorbing the papers and with CDIs with higher volumes and rates closing. So it's a very healthy dynamic. How sustainable it's going to be, only time will tell. But I can say that this was a very successful initiative.

Milton Filho: How sustainable it's going to be, only time will tell. It was a record quarter, I would say, for DCM, but we are waiting for a certain normalization over the next few quarters. I don't know if we're going to see quarters that are so good for results and dynamics as we've seen for this quarter, but the dynamics are very healthy. It's difficult to project the results of this slide. Equity markets, we don't see any chance in the short term.

Speaker Change: It was a record quarter, I would say, for DTM, but we are waiting for a certain normalization over the next few quarters.

Speaker Change: I don't know if we're going to see quarters that are so good for results and dynamics as we've seen for this quarter, but the dynamic is very healthy.

Milton Filho: There is always going to be a deal or a follow-up. We are looking at pinpoint operations, some activity, and investment banking. It's a DCM market per se. I'm waiting for normalization. I don't think that it's going to continue at the rhythm of the second quarter, but given our fair share, if the market continues to be heated up, we will continue to seize those opportunities. Thank you, Brian. Now for the next question, Thiago Batista, UBS.

Speaker Change: It's difficult to project the results of this slide. Equity markets...

Speaker Change: We don't see in the short term any chance. There is always going to be a deal or a follow-up. We are looking at pinpoints, operation terminates, some activity, and the investment banking, it's a DCM market per se.

Speaker Change: I'm waiting for a normalization. I don't think that it's going to continue with the rhythm of the second quarter, but given our fair share, if the market continues to be heated up, we will continue to seize those opportunities.

Brian Flores: Thank you, Brian.

Brian Flores: Now, the next question, Tiago Batista, UBS.

Milton Filho: Good morning, everyone. Congratulations on your result. Now, Milton, you commented at the beginning of the call about the utilization of capital, and that would take the ROI of the bank to about 24% consolidated and 25% in Brazil. If I'm not wrong, that should be the highest level since 2015 or something close to that. And I remember some years ago that we discussed if the ROI of Ita was going to go into the middle teens, given the competition of newcomers. But that's not happening.

Tiago Batista: Good morning everyone. Congratulations on the result. Now, Milton, you commented at the beginning of the call about the utilization of capital and that would take the ROI of the bank about 24% consolidated and 25% in Brazil. If I'm not wrong, that should be the highest level since 2015 or something close to that.

Speaker Change: And I remember some years ago that we discussed if the ROI of Itaú was gonna go middle teens given the competition of newcomers, so that's not happening.

Milton Filho: But, you know, my question to you, that level of ROI, 24, 25, is it sustainable in the medium term? And do you have a plan for increasing the frequency of capital allocation? Today, if I'm not wrong, you optimize capital once a year at the end of the year, and then you pay the dividend. Would that be more recurrent, maybe twice a year, something like that? Thank you for that. So we can see, in fact, that ROI is migrating to 24. Well, thank you, Thiago.

Speaker Change: My question to you, that level of ROI,

Speaker Change: And do you have a plan for increasing the frequency of the capital allocation? Today, if I'm not wrong, you are optimizing the capital once a year, at the end of the year, and then you'll pay the dividend. Would that be more recurrent, maybe twice a year, something like that?

Speaker Change: So we can see, in fact, that ROI migrating to 24.

Milton Filho: I think that in the end, and since we do not do ROI guidance, we are not projecting ROI in the long-term; we are projecting value creation. As a relationship with the cost of capital, a direct relationship, we've been delivering this level of profitability because of a series of reasons. We have a benign cycle of credit operation in the wholesale with a threshold that is very high. When we looked in the past, the operation of retail had a higher ROI than the wholesale, but we never worked with and operated with this level of profitability in the wholesale as we've operated in these years. Maybe that's the twist of what changed what you mentioned from previous years and what we observe now.

Speaker Change: Well, thank you, Thiago. I think that in the end, since we do not do guidance of ROI, we are not projecting the ROI in the long term, we are projecting the value creation.

Speaker Change: As a relationship with the cost of capital, direct relationship, we've been delivering this level of profitability because of a series of reasons. We have a benign cycle of credit operation of the wholesale with a threshold that is very high.

Speaker Change: When we looked at the past...

Speaker Change: The operation of retail had a higher ROI than the wholesale, but we never worked and operated with this level of profitability in the wholesale as we've operated.

Speaker Change: in these years. Maybe that's the twist of what changed what you mentioned from the previous years and what we observe now.

Milton Filho: We, in fact, can raise the profitability of wholesale banking in the broad sense of the word. It's not just Ita BBA with medium and large companies. It's not just investment banking.

Speaker Change: We, in fact, can raise the profitability of the wholesale in the broad sense of the word, it's not just Itaú BBA, with medium and large companies, it's not just investment banking, it's the whole cross sale, and also our assets.

Milton Filho: It's a whole cross sale and also our asset that has a relevant role in the value creation of the wholesale and the Latin American operation that has been evolving all throughout the many years. So what wasn't in the equation at that time was that we could take the operation of wholesale at the profitability level that we've observed, and that has been sustainable nonetheless. It wasn't just a jump that went down.

Speaker Change: It has a relevant role in the value creation of the wholesale and the Latin American operation that has been evolving all throughout the many years.

Speaker Change: for me.

Speaker Change: So what wasn't in the equation at that time is that we could take the operation of wholesale for the profitability level that we've observed, and that has been sustainable nonetheless. It wasn't just a jump that went down. We can see quarter on quarter we've defended the profitability of wholesale in all the businesses. Including this last quarter, there was an additional increment in the profitability of wholesale. Optimization of capital, there is risk management, there is an increase in penetration, there is creation of new businesses.

Milton Filho: We can see, quarter on quarter, we've defended the profitability of wholesale in all the businesses, including this last quarter, there was an additional increment in the profitability of wholesale. Optimization of capital, there is risk management, there is an increase in penetration, there is creation of new businesses, there is an increase in penetration in products and services that generate cross-sells, and fee business. I mean, there is completeness here.

Speaker Change: There is an increase in penetration in products and services that generate gross sales, feed business. I mean, there is a completeness here.

Milton Filho: And we've been able to lead most of these businesses, and we've been in the first positions in the rankings, and that brings strength to our wholesale operation. I think that it depends on circumstantial macro and micro issues. We continue to operate with a 20-plus when we look at the guidance, the ROI, not less than 20%. But this year, adjusted for the appetite, we have been running with an ROI level historically very high. We're doing an important catch-up with the wholesale bank. We went through an adjustment.

Speaker Change: On circumstantial macro and micro issues, we continue to operate with a 20 plus when we look at the guidance, the ROI, not less than 20%. But this year, adjusted by the appetite, we have been running with an ROI level historically very high.

Milton Filho: We had the pandemic, regulatory issues, profitability of retail going down, and then we can go quarter-on-quarter, increasing the profitability of the retail business. For individuals and companies, you remember that in the past, we ran 16% profitability in the retail business, and now we are running at 23.5% in this quarter. So there was an important catch-up, quarter-on-quarter, and it's that blend, that mix that makes us be able to grow profitability, and at the same time, in the corporation, everything that is a margin with the market that is not wholesale and retail, as you've observed, we've been managing to deliver results and generate alpha with the risk of the market.

Speaker Change: 16% profitability in the business.

Milton Filho: So it's all of those factors that allow us to operate with that level of ROI. So it's a perfect alignment maybe of the stars, obviously, but we are also subject to changes in scenario, in perspectives, but looking at the horizon, relatively short-term.

Milton Filho: We are long in what we can observe; the bank will continue to deliver good profitability, and we are sure of that. And the quality of the results, if you look at the different lines of this balance sheet, it's a high-quality result and highly recurrent, which is very important. There are no events that are going up and down in our results.

Milton Filho: In the end, we have a lot of discipline and consistency in the management of our deliveries. In the capital issue, well, in practice, since we are declaring the dividend, we are doing an adjustment. Now, in August, the dividends, the JCPs that have been declared over the last quarter, the interest on capital, and that has been done. The first payment, I would like to say, is...

Speaker Change: In the end, we have a lot of discipline and consistency

Milton Filho: It has been done, but I think that once a year, with the information available and with the uncertainties that we still have ahead, there are regulatory changes, there are operational risk, there is a financial review of the trading book, there is the solo basis, there are the discussions of the DTAs, IFRS 9, there is the risk of credit for the operation, an increase in the risk of Basilea, and Basilea 3 operational risk. Well, when you pile up those uncertainties and plus all the perspectives of growth and opportunities that we've seen, we think that doing that capital management of the optimization of capital once a year is very adequate.

Speaker Change: It has been done, but I think that once a year, with the information available and with the uncertainties that we still have up ahead, there is regulatory changes, there is operational risk, there is financial review of the trading book, there is the solo basis.

Milton Filho: And we also use the hybrid tools, AT1s, AT2s, and we're going to continue to do that, always thinking about optimizing the capital base of the company. But now, when distributing the dividend, we can maybe change our opinion, have some extraordinary dividend distributed, maybe in the future, yes, that might happen. That's not what we imagined that was going to happen, at least in 2024. Our expectation is to end the year with a good vision, prospects for opportunities in regulatory issues, a good operation of capital capacity, and generating organic capital, so we can do a good calibration and make another payment of extraordinary dividends. With the information that I have to date, the payment will be made.

Speaker Change: And we also used the hybrid tools, AT1s, AT2s,

Speaker Change: With the information that I have to date, the payment will be done.

Milton Filho: There will be an extraordinary dividend. But we also see as an advantage that we have a capital base that is very solid because opportunities will come up. If you see that we grew the portfolio, we grew strongly in the quarter, and we still expanded the capital base of the bank. I mean, there is no healthier dynamic than having a strong balance, seizing opportunities, organic, and inorganic. What we know and what we do not know yet. Be ready to do the movements that are necessary.

Milton Filho: So here you have to be very careful because the great is the enemy of the good, as we say in Portuguese. Well, you know, we have to be objective in value creation. If we understand that we have an adequate allocation of capital, creation of value, and good profitability for the shareholder, that's the central driver for all of us. But it's not our objective to retain excess capital. So if, in fact, at the end of the year, we do our work, and at the beginning of the year, we will communicate to the market what that extraordinary dividend is, but once a year seems to be OK. You said that there was going to be a question about dividends, and yes, certainly.

Speaker Change: and me.

Speaker Change: If we understand that we have an adequate allocation of capital, creation of value, giving good profitability for the shareholder, that's the central driver for all of us. But it's not our objective to retain excess capital. So if in fact...

Speaker Change: In the end of the year, we do our work, and at the beginning of the year, we will communicate to the market what is that extraordinary dividend, but once a year seems to be okay.

Speaker Change: for what you have.

Speaker Change: You said that there was going to be a question on dividends, and yes, that was certain. Next question.

Milton Filho: We have Mario Pierry from BFA.

Milton Filho: Hi everyone, congratulations on the results. Another quarter, very predictable, good trends. I want you to focus on the Capitol. With the implementation of IFRS 9 next year, what is going to be the impact? Did you manage to calculate the impact on capital? And another question that I have is about Americanas.

Speaker Change: With the implementation of IFRS 9 next year, what is going to be the impact? Did you manage to calculate the impact on capital?

Milton Filho: It seems that the negotiations have improved. Do you have the potential for the revision of those provisions that you had for Americanas, the company? Thank you, Mario.

Speaker Change: And another question that I have is about Americanas. It seems that the negotiations have improved. Do you have a potential for the revision of those provisions that you had for Americanas, the company?

Milton Filho: Thank you for the question. Okay, to give you some context, at the end, with the change to IFRS 9, it has an accounting change, the way that we publish our results, the gap between our IFRS and what is Basilea 3, but there is also a tax issue, in the sense that you can no longer choose how much you're going to waste, tax the expense of a bad debt. You have to pay that PDD, that bad debt, all throughout the year.

Speaker Change: Thank you, Mario. Thank you for the question.

Speaker Change: Okay, to give you some context, in the end, with the change of IFRS 9, it has an accounting change, the way that we publish our results, be our GAAP, our IFRS more adapted to what is Basilea 3,

Speaker Change: But also there is a tax issue in the sense that...

Speaker Change: You can no longer choose how much you're going to waste, tax the expense of bad debt. You have to pay that PDD, that bad debt, all throughout the year. There is an optimization of tax and capital. And the main impact is the stock that the norm has to say that you have to do the amortization in three years, at the time that it's...

Milton Filho: There is an optimization of tax and capital, and the main impact is the stock that the norm has to say that you have to do the amortization in three years at the time that it starts to work. So let me start from the end. Even if we had to do the amortization in three years, there would be no material impact for Ita Bank. That's the first message.

Speaker Change: It starts to work.

Milton Filho: The bank has the capacity and results and stock that is adequate to absorb those provisions and those expenses in three years, 2025 onwards if the norm prevails. Of course, when that happens, that generates another impact. It generates, for the optimization of capital, fewer impacts in the index because you stop to optimize the capital, that optimizes 100, and then you have to withhold other tax credits that have a ponderation that is higher. You have the consumption of CTPF; the capacity to absorb is less.

Speaker Change: That is adequate to absorb those provisions and those expenses in three years from 2025 onwards, if the norm prevails.

Speaker Change: Of course, when that happens, that generates another impact. It generates, for the optimization of capital, less impacts in the index, because you stop to optimize the capital of PDD that optimized 100, and then you have to withhold other tax credits that have a ponderation that is higher. You have the consumption of CTPF, you know, the capacity to absorb is less.

Milton Filho: So there are impacts. They are not zero impacts, but they are immaterial for Itau Unibanco. But it's not necessarily the same thing for the industry. What is it for us? What do we believe?

Milton Filho: We believe that there is a debate that is taking place, with the central bank, with the finance ministry, so that everyone has awareness of the impact. It doesn't matter that you look; it's not going to work if you just look at bank A or B; you have to look at the whole system. We're inside of that debate; we introduced that. And we believe that there is a way to work with this norm, this law, to create a condition so that there is no capital impact on the system so that the banks continue to work and give credit and continue with their activities without any relevant impact.

Speaker Change: What is for us? What do we believe? We believe that there is a debate that is taking place.

Speaker Change: With the central bank, with the finance ministry, so that everyone has awareness of the impact. It doesn't matter that you look, it's not going to work if you just look at bank A or B. You have to look at the whole system. We are inside of that debate. We are inserted there.

Speaker Change: And we believe that there is a way to work with this norm, this law, to create a condition so that there is no capital impact on the system so that the banks continue to work and giving credit and with their activities without any relevant impact. In the end, every bank has a different condition. The data is public. The stock, the tax, the absorption data are there.

Milton Filho: In the end, every bank has a different condition. The data is public, the stock, the tax, the absorption data are there for the public, and there is a premise: it depends on your analysis and ours for the projection of the results throughout the future.

Speaker Change: For the public, and there is a premise, it depends on your analysis and ours for the projection of the results all throughout the future. There is a tax reform that might happen this next year, might not.

Milton Filho: There is a tax reform that might happen this next year, might not. If there is a credit tax re-evaluation, if the aliquot for the corporations drops, what is the impact of, There are many nuances here. February is leading the discussion. CNF is involved with the finance ministry or the central bank.

Speaker Change: If there is a credit tax re-evaluation,

Speaker Change: There are many nuances here, Pedro is leading the discussion, CNF is involved with the finance ministry or the central bank, I think that all the banks are going to have to be on the table.

Milton Filho: I think that all the banks are going to have to be at the table to see if there is an alternative to the norm that is on site. We could work with, you know, some longer deadlines for the amortization of the stock, maybe. That's what's on the table. We believe that the new norm is important. Certainly, it will be implemented. But the question is the timing, when it will effectively start, and specifically for the tax issue, when it's going to be implemented.

Speaker Change: So, to see if there is an alternative to the norm that is on site. We can work with, you know, some longer deadlines for the amortization of the stock, maybe. That's what's on the table. We believe that the new norm is important. Certainly, it will be implemented, but the question is the timing, when effectively it will start, and specifically for the tax...

Milton Filho: But there is goodwill from everyone because there is a common problem for everyone and for the government, because if all the banks start to anticipate tax consumption, that's going to impact how much the government will get in terms of the amount of money. So there is goodwill, so that's... It's still at the beginning of the debate. Good debates, good conversations, but we don't have any other information on how that issue will be resolved.

Speaker Change: So there is goodwill, so that's...

Speaker Change: Within the discussion, but it's still at the beginning of the debate. Good debates, good conversations, but we don't have any other information on how that issue will be conducted.

Milton Filho: So now the government will have a decision that information will be public, but there is goodwill to mitigate and decrease some of that impact in the system. Next question. Thank you, Milton and Mario. Next question, Nishio from Geneva.

Speaker Change: As soon as the government will have a decision, that information will be public. But there is a goodwill to mitigate and decrease some of that impact in the system.

Speaker Change: Next question. Thank you, Milton and Mario. Next question, Nishio from Janiel.

Milton Filho: Good morning Milton and Renato. Congratulations on the consistent results for the quarter. I want to go back to the app. It's very interesting that you are taking the risk again and implementing the two apps. The first part would be an update of Atlas that hasn't been mentioned yet. How do you see the ramp-up of that product? It's a product that... You know, the other incumbent banks. They still don't have that, And how do you think it's going to impact the industry with this new product? And if you can, share them with us.

Nishio: Congratulations on the consistent results for the quarter. I want to go to go back to the app. It's very interesting that you are taking the risk again and the implementation of the two apps.

Speaker Change: The first part would be an update of Atlas that wasn't mentioned yet. How do you see the ramp-up of that product?

Speaker Change: It's a product that...

Milton Filho: The level of cross-sale, the pilot plan of one, cross-sale is the main objective for this product. How was the cross-selling of this product in the pilot plan, and do you expect a reversion of 98% when you do...

Speaker Change: And if you can, share with us.

Speaker Change: The level of cross-sale, the pilot plan of one, the cross-sale is the main objective for this product. How was it in the pilot plan, the cross-selling of this product? And do you expect a reversion of 98% when you do...

Milton Filho: This could roll out of that product. The second question is in regards to. Your sensitivity to the margins, the analysis, is very interesting. Besides the margin, you also do the hedge of capital. And I wanted to understand the dynamics of those two hedges that you do, that protect them from the volatility of CDI, and how should we think about that in the medium to long term, because according to the numbers that you presented, I believe that we can conclude that.

Speaker Change: abroad

Speaker Change: rollout of that product.

Speaker Change: Your sensitivity to the margins, the analysis, is very interesting.

Speaker Change: Besides the margin, you also do the hedge of the capital. And I wanted to understand the dynamics of those two hedges that you do.

Speaker Change: Regardless of an interest rate that is lower,

Milton Filho: We could expect a margin, annualized margin, at least, that is adjusted for a higher risk. So is that correct? How do you think about that dynamic of margin and CDI? Thank you. Thank you, Nicio, for the question.

Speaker Change: We could expect a margin, annualized margin at least, that is adjusted for a higher risk.

Speaker Change: So, is that correct? How do you think about that dynamic of margin and CDI?

Speaker Change: Thank you. Thank you, Nishio, for the question.

Milton Filho: Let me start by saying Itau 1. Our focus, the central focus of the pilot and the discussion that was around the experience of the migration. So, we do not have, like you say, we're not running after a cross-sale without completing, without having the complete migration to the platform. It has to be a soft welcome. I migrate, and the client has to feel welcome. It has to improve the features, the quality, the experience, they have to feel welcome. The way that we can communicate with the client changes, and this has been the central focus of our pilot.

Speaker Change: Let me start by Itau 1.

Speaker Change #100: Our focus...

Speaker Change #101: Central focus in the pilot and the discussion that was in the experience of the migration so

Speaker Change #102: We do not have, like you say, we're not running after a cross sale without completing

Speaker Change #102: The way that we can communicate with the client changes and this has been the central focus of our pilots.

Milton Filho: That, to us, is priority one, two, three, to ensure that the migration is done with quality, with care, and that the client doesn't feel that, oh, I migrated from the platform, and I am receiving a push of products, offers, and solutions, because, in the end, that's not pro client. That's an old and wrong way of trying to preclude business with our clients.

Speaker Change #102: That to us is priority one, two, three, to ensure that the migration is done with quality, with care, and that the client doesn't feel that, oh, I migrated from the platform and I am receiving a push of products and offers and solutions.

Speaker Change #102: Because in the end, that's not pro-client.

Speaker Change #102: That's an old and wrong way of trying to preclude businesses with our clients.

Milton Filho: The way that we work is to work within the context of the journey of the client. First, we migrate, then we create the context. The client starts to have an app with many solutions and features. They have access with more frequency to the different solutions.

Speaker Change #102: The way that we work is to work within the context of the journey of the client. First we migrate, then we create the context, the client starts to have an app with many solutions and features, they have access to more frequency to the different solutions.

Milton Filho: And we get into the context. Did they register a PIX key? If they have the journey of the PIX, they have access to the credit of the payment with the PIX.

Speaker Change #102: And when we get into the context, did they hire, did they register a PIX?

Speaker Change #103: Key, if you haven't, the Journey of the Pigs.

Milton Filho: Well, that's going to be coming up in the future. So the pilots that we've done, the cross-sale, are encouraging, but they're still baby steps. There is not enough to show that this is a relevant pilot that is worth getting into any assessment or conclusion. We're still at the beginning of these pilots. Priority number one, two, and three is to ensure that these clients are on board this new app, this new platform, this new journey.

Speaker Change #103: They have access to the credit of the payment with the PICS.

Speaker Change #103: Well, that's going to be the...

Speaker Change #127: The pilots that we've done, the cross sail, they are encouraging, but they're still baby steps. There is not enough to show that this is a relevant pilot that is worth to get into any assessment or conclusion. We're still at the beginning.

Speaker Change #106: of these pilots. Priority number one, two, and three is to ensure that these clients are on board on this new app, this new platform, this new journey. The cross-sale has to be within this context.

Milton Filho: The cross-sale has to be within this context with quality and care, so we can naturally show to the client that there is a relevant value to understanding their migration and their needs. Well, this is Itau. It's a work in progress. Over the next quarter, we're going to have data to share with you on pilots and migration.

Speaker Change #103: With quality and care, so we can naturally show to the clients that there is a relevant value of understanding their migration and their needs.

Speaker Change #104: Well, this is Itau. It's a work in progress. Over the next quarter, we're going to have data to share for you with pilots and migration. That has been done.

Milton Filho: But at last, it's important to give you some context. Atlas, we don't see it today in the same way that we see Juan Ita as something that we have to ramp up, grow, and there are 15 million clients that we have to service overnight.

Speaker Change #105: What about atlas? It's important to give you some context.

Speaker Change #105: Atlas, we don't see it today in the same way that we see One Itaú as something that we have to ramp up, grow, and there is 15 million clients that we have to service overnight, no. Atlas, in the end, complements a part of our value proposition and offering that was lacking.

Milton Filho: Atlas, in the end, complements a part of our value proposition and offering that was lacking. So, we invested a lot of time understanding the needs of the entrepreneurs, talking to the clients, understanding their demands throughout these years, and we did a relevant revision of all of our service model, for the proximity of where the products, all with, it was a complete review. And the campaign that we've just done for the repositioning, you only do a campaign when you really have an important change in the value proposition and offering for the client.

Speaker Change #105: So, we invested a lot of time understanding the needs of the entrepreneurs, talking to the clients, understanding their demands throughout these years, and we did a relevant revision of all of our model for service for the proximity of where the products

Speaker Change #105: It was a complete review. And the campaign that we've just done for the repositioning, you only do the campaign when you really have an important change in the value proposition and offering for the client.

Milton Filho: So the campaign for repositioning is based on that because we've been growing quality in our business, in our company's business. And we think that this is a good moment for growth, for acquiring new clients, and increasing the base. And with the repositioning campaign, we are ready to ramp up our operations in the companies.

Speaker Change #105: So the campaign for repositioning is based on that, because we've been growing with quality in our business, in our company's business, and we think that this is a good moment for growth.

Speaker Change #105: For acquiring new clients, increasing the basis, and with the campaign of repositioning, we are ready to ramp up our operations in the companies. How Atlas is inserted in that. It's another value proposition. You have within the pyramid of the companies, the different segments,

Milton Filho: How Atlas is inserted into that, it's another value proposition. You have within the pyramid of the companies, the different segments, for each of them, a value proposition that is very niched, understanding the needs of the client, the entrepreneur. And Atlas comes in for companies, for those companies that want to self-serve, want to be fully digital, simple products within a context with artificial intelligence, and that we can, in fact, understand with data the needs of the client. We can deliver the context within this journey. Atlas is also at the inception phase. It's a pilot.

Speaker Change #105: For each of them, a value proposition that is very niche.

Speaker Change #105: Understanding the Needs of the Client, the Entrepreneur, and ATLAS.

Speaker Change #105: get in for the companies.

Speaker Change #105: Those for those companies and that wants to self-service want to be fully digital simple products within a context with artificial intelligence and that we can in fact understand with data

Speaker Change #107: The needs of the client. We can deliver the context within this journey. Atlas is also at the inception phase. It's a pilot. It's a few thousand clients that are operating in Atlas.

Milton Filho: It's a few thousand clients that are operating in Atlas. Our expectation is that as those clients are becoming more digital and they have digital needs, Atlas is within our value proposition, providing that. So it cannot be seen as a business that is separated from the bank. In the end, it is part of the offer of the business unit companies. They service the complex needs of the clients and serve the simple digital needs of the clients. So I don't see it in the same way that I see Juan Itau.

Speaker Change #108: and the rest of the world. Thank you. Thank you.

Speaker Change #109: We are expectation is that

Speaker Change #109: Our, as those clients are becoming more digital and they have digital needs, our policy is within our value proposition, providing that. So it cannot be seen as a business that is separated from the bank.

Speaker Change #109: In the end, as part of the offer of the business unit companies, they service the complex needs and services the simple digital needs of the clients.

Milton Filho: That's why we're not providing many details because it's part, once again, of the value proposition of this segment. Now, the other question about margin. It's natural that the business has some sensitivity to the interest rate. And I would like to say, from what is visible, with interest rates dropping, we have two effects. First, the working capital of the bank that suffers. Naturally, as you roll out that operation, there are lower rates.

Juan Itaú: So I don't see it in the same way that I see Juan Itaú. That's why we're not providing many details because it's part, once again, of the value proposition of this segment. Now the other question about margin, it's natural that the business has some sensitivity to the interest rates.

Juan Itaú: And I would like to say, from what is visible, with the interest rates dropping, we have two effects. First, the working capital of the bank that suffers, naturally, as you roll out that operation, there is lower rates.

Milton Filho: And the liabilities of the bank also impact the interest rate. There are benefits with the reduction of the interest rate. The differential of the interest rate drops, and the cost of the hedge also has an impact. But the two big impacts here are those two.

Juan Itaú: And the liabilities of the bank that impact also in the interest rate. There are benefits with the reduction of the interest rate, the differential of the interest rate drops, the cost of hedge also has an impact.

Milton Filho: On the other hand, when that happens, you have more opportunity for growth in a portfolio where the interest rate is lower, and the delinquency rate tends to be lower, given the interest rate level. Now, our portfolio today, whether it's under liability or assets, it's very balanced. So whether it's navigating the margin of the market, the way that we do the hedge of the risk factors, whether it's the margin with the client, and the way that we operate with the different businesses, that has brought balance to our margin. So you'll have negatives like interest rates, but you have several positives, and you have several positives and negatives in the other scenario.

Juan Itaú: But the two big impacts here are those two.

Juan Itaú: On the other hand, when that happens, you have more opportunity for growth in a portfolio where the interest rate is lower, and the delinquency tends to be lower, given the interest rate level.

Juan Itaú: Now, our portfolio today...

Juan Itaú: Whether if it's under liability or assets...

Juan Itaú: It's very balanced.

Juan Itaú: So, whether if it's navigating with the margin of the market, the way that we do the hedge of the risk factors, whether it's the margin with the client, and the way that we operate with the different businesses, that has brought balance to our margin. So you have negatives as the interest rates, but you have several positives, and you have several positives and negatives in the other scenario.

Milton Filho: Besides that, our portfolio for business is very balanced. So you have business at wholesale and retail that will compensate themselves all throughout the cycle. That's why the risk adjustment is important to be taken into consideration in this series. That's a central point.

Juan Itaú: Besides that, our portfolio for business is very balanced. So you have business on the wholesale and the retail that will compensate themselves all throughout the cycle.

Speaker Change #111: That's why the risk adjustment is important to be taken into consideration in this series. That's a central point. Because of the hedge of the index, it's important that you mention that.

Milton Filho: The cost of the hedge of the index, it's important that you mention that. It's almost like satisfaction at a decision that we took two years ago when we made the decision to do the cost of the hedge of the index. The first thought is, whoops, there is a cost, and we said that it could cost 500 million for a quarter when the decision was made. And when we did the guidance for that year, we removed 2 billion for the margin for the market, which was the exercise of the cost of the hedge of the index.

Speaker Change #112: It's almost like a satisfaction of a decision that we took.

Renato Jacob: and Renato Jacob.

Speaker Change #113: And when we did the guidance for that year, we removed $2 billion for the market, which was the exercise of the cost of the hedge of the index. What happened is that the differential of the interest rate

Milton Filho: What happened is that the differential of the interest rate besides the management has brought lower impacts. But imagine what would happen with our capital index had we not done the hedge of the index all throughout these years. With this volatility, you see that the portfolios of the wholesale grew by a third through exchange rates. And all the Latin American operations, if we had not done the hedge of the index, what would the capital index right now be? Would we have that access? Would we be able to grow with the same strength that we've been growing?

Speaker Change #114: the Pacifics.

Speaker Change #114: What would be the capital index right now? Would we have that access? Would we be able to grow with the same strength that we've been growing?

Milton Filho: Would we be able to have that, to bring you that predictability to do great, big projections in the long term? So, today, when we look in the European mirror, that was a great decision. Of course, there is a cost.

Speaker Change #114: Would we be able to have that to bring you that predictability to do great big projections on the long term?

Speaker Change #115: So today, when we look in the European mirror, that was a great decision. Of course, there is a cost. We invested in other currencies, but it brought a great stability for our capital index. The more stability you have, the more safety you have, the bigger is your capacity to protect growth, decision-making process, inorganic, organic, without worrying if we're going to have capital or not in the next quarter.

Milton Filho: We invested in other currencies and other areas, but it brought great stability to our capital index. And the more stability you have, the more safety you have, the bigger your capacity to protect growth, decision-making processes, inorganic, and organic, without worrying if we're going to have capital or not in the next quarter. So, that's the central core point. And, of course, in the scenario of changing interest rates, treasury operations, and especially the banking book, have a sensitivity that is natural to the levels of interest rates.

Speaker Change #115: So that's the central core point.

Speaker Change #116: And of course in the scenario of changing interest rates, treasury operations, and especially the banking book has a sensitivity that is natural to the levels of interest rates.

Milton Filho: But we are always working to leave a framework of limits and spaces so we can manage our assets and liabilities and do a good hedge of the bank when we think that it's appropriate so that balances the margin with the market and the margin with the client we have done. I'm just going to ask you two minutes. Going back to the second question from Mario about BFA, you know, it was so complicated and complicated, and we forgot about the question about Americana I was just reminded of that.

Speaker Change #116: But we are always working to leave a framework of limits and spaces so we can manage our assets and liabilities and do a good hedge.

Speaker Change #116: The Bank when we think that it's appropriate so that balance with the margin with the market and a margin with a client we've done

Speaker Change #117: The level of sensitivity with interest rates is much lower, so that's why we have that record, that history. Well, guys, I'm just going to ask you two minutes, going back to the second question of Mario.

Speaker Change #118: of BFA. You know, it was so complex and complex and we forgot about the question about Americanas.

Milton Filho: Well, good. Yes. And you see that the objective was not to steer away from the question, Mario. Let's go back. Americanas. In fact, we adopted a strategy of living in a relevant way and at the bid, the data is there, we did a management with the information that we had of reducing relevantly the exposure and the risk, Naturally, we continue the participation that we have in the company is Very small, very, very irrelevant, and there is still some credit lines without getting into a lot of detail because of the we cannot comment but the data with the data that is public that's the information that I can give you and I would like to say that at this moment we're discussing what are going to be the impacts remember that when we did the provision for our Americans in the balance sheet and the fourth quarter of 22, the subsequent event. What we what did we do? Half is, While rounding up.

Speaker Change #119: Can you comment that second part? I was just reminded. Well, good. Yes. And you see that the objective was not to steer away from the question, Mario. Let's go back. Americanas.

Speaker Change #120: In fact, we adopted a strategy of living in a relevant way, and at the bid, the data is there, we did a management with the information that we had of reducing relevantly the exposure and the risk.

Speaker Change #120: Naturally we continue. The participation that we have in the company is...

Speaker Change #121: Very small, very, very irrelevant.

Speaker Change #121: And there is still some credit lines without getting into a lot of detail because of the, we cannot comment, but the data, with the data that is public.

Speaker Change #122: That's the information that I can give you. And I would like to say that at this moment, we're discussing what are going to be the impacts. Remember that when we did the provision for our Americans in the balance sheet in the fourth quarter,

Speaker Change #122: of 22, the subsequent event, what did we do?

Milton Filho: About half of those provisions were done in the complementary, the complementary provision. So we attributed a complementary provision for Americanos.

Speaker Change #123: I'm all rounding up.

Speaker Change #123: About half of those provisions were done in the complementary, the complementary provision. So we attributed a complementary provision for Americanos. And the other part, about half, went through invoice, the P&L of the bank.

Milton Filho: And the other part, about half, went through invoices, the P&L of the bank. So when you have a reversal, a receivable, it has an impact on several lines, from the P&L lines and a complementary one. What we're going to discuss is, you know. Taking into consideration the quarter that will be closed in the next month, and we always review the portfolio case-by-case, where there is a provision, where we need it, what the scenario that changed is, then we're going to have a clear vision. This is not an effect that will be repeated in the next quarters. This is an isolated incident.

Speaker Change #123: So when you have a reversal, a receivable, it has an impact in several lines, from lines of P&L and a complementary one.

Speaker Change #124: What are we going to discuss is, you know,

Speaker Change #124: Taking into consideration the quarter that will be closed in the next month.

Speaker Change #125: And we always review the portfolio, case by case, where there is a provision, where do we need it, what's the scenario that changed, then we're going to have a clear vision. Since this is not an effect that will be repeated.

Milton Filho: My opinion is that not giving that information precisely now does not impact the model and the flow that you have to look at for the future, given the isolated effect and the one-off that it has in this business. Possibly in the next quarter, when I talk about this result, you will get the details on how we handled the Americanas case. But the fact is, from the standpoint of complementary or P&L, we're going to have a relevant receivable for a provision that was 100% done on the balance sheet.

Speaker Change #125: In the next quarters, this is an isolated effect. My opinion is that not giving that information precisely now

Speaker Change #125: Does not impact the model and the flow that you have to look at the future given the Isolated effect and the one-off that it has in this business

Speaker Change #126: Executive, Milton Filho, Renato Jacob

Speaker Change #128: Possibly in the next quarter, when I talk about this result, you will get the details on how we work the Americanas case. But the fact is, from the standpoint of complementary or P&L, we're going to have a relevant receivable of a provision that was 100% done in the balance sheet. That's the positive news.

Milton Filho: That's positive news, a recovery that is relevant given the provisions. But how are we going to work it out and allocate it? We haven't made that decision, and that's for the future. But Mario, it's an important question because I read all the reports that were published yesterday.

Speaker Change #128: It's a recovery that is relevant given the provisions, but how are we going to work it and allocate it? We haven't made that decision, and that's for the future.

Mario: But Mario, it's an important question because I read all the reports that were published yesterday. You have to have precisely the coverage of the wholesale. It has a high, it's very high because we do the provisions before we have any delays. Those clients are, you know...

Milton Filho: You have to have precisely the coverage of the wholesale. It has a high, it's very high because we do the provisions before we have any delays. Clients are, you know, they don't have voided credits.

Milton Filho: So it gives you a false sensation of access in regards to delay. But any delay that it has, the degree of the sensitivity for wholesale is big. So any changes in the P&L, you have all of that. So that's why you have to look at the total coverage level and not guide yourself through the index of wholesale because it doesn't tell you a lot. Americanas has a provision made in the balance sheet, but the delay is not there.

Mario: They don't have voided credits, so it gives you on...

Speaker Change #130: It's a false sensation of excess in regards to delay, but any delay that it has, the degree of the sensitivity for the wholesale is big. So any changes in the P&L, you have volatility. So that's why you have to look at the total coverage level and not guide yourself through the index of the wholesale because it doesn't tell you a lot.

Milton Filho: So in the end, we are going to have some impact looking ahead in Americanas. And depending on the decision-making process that we do, it will have an impact on the coverage index. But, you know, to give you some numbers, 10, 15 points in the coverage point level total is reasonable to take into consideration depending on how we treat Americanas in the next quarter, but this is just to give you my sensitivity.

Speaker Change #130: Americanas has a provision done in the balance sheet, but the delay is not there. So in the end, we are going to have some impact looking up ahead in Americanas. And depending on the decision-making process that we do, it will have an impact in the coverage index.

Speaker Change #130: But, you know, to give you some numbers, 10, 15 points in the coverage level total is reasonable to take into consideration depending on how we treat Americanos in the next quarter, but this is to give you my sensitivity. It's more material in the index of coverage for the wholesale than the whole.

Milton Filho: It's more material in the index of coverage for the wholesale than the whole. So it's important that you take this care and you don't do it; when you don't do the evaluation of the index of coverage for the wholesale, it's high volatility because of immaterial effects.

Speaker Change #130: So it's important that you take this care and you don't do, when you don't do the evaluation of the index of the coverage of the wholesale, it's high volatility because of immaterial effects.

Milton Filho: Thank you, Milton. And now, continuing... Thank you, Yuri, for waiting.

Milton Filho: Thank you, Milton.

Milton Filho: Obrigado. Bem-vindo aqu ao...

Milton Filho: Now, continuing.

Milton Filho: Thank you, Yuri, for waiting.

Milton Filho: Thank you, Luria and Milton. Congratulations on your results!

Speaker Change #132: Welcome to the call.

Yuri: Thank you.

Milton Filho: It's no surprise that they are good. Why don't you ask about wholesale? I wanted to explore the margin. We see that the portfolio is growing year on year. Of course, there is the exchange rate. Of course, there is SELIC and LATAM.

Milton Filho: Here we're thinking about those points, but the NII grew zero, the portfolio grew 11, the ROE capped at 28, and voice didn't grow. So the bigger portfolio, higher leverage. Thinking about assets on PL. So what are the drivers that are behind this?

Milton Filho: So, it might be a LATAM or fees that we're not making so much money on NII, but we're monetizing the clients through FII. So just those economic issues on wholesale. Thank you.

Speaker Change #134: It's important to understand how we work those results and we provide the results in the business model.

Milton Filho: Good question. Good to clarify. It's important to understand how we work those results, and we provide the results in the business model. The wholesaler has LATAM in their asset. So let's leave that on the side for a bit and look at Ita BBA per se. Those activities and businesses of credit. What happens here?

Milton Filho: We are working with 12 of capital, which is what we use. A minimum of the dividend is also allocated in the business. And we made a decision to allocate capital of 11.5% in this quarter and leave the excess of capital of 11.5% and how much we have, in this case, 13.1% in the corporation of the bank. So when you look at the business model, we publish wholesale, we publish retail, and we publish the bank plus margin for the market. So what happens when you do that? First, an automatic impact.

Speaker Change #134: We are working with 12 of capital, which is what we use. Minimum of the dividend also allocated in the business.

Speaker Change #134: And we made a decision of allocating in this quarter a capital of 11.5 and leaving the excess of capital of 11.5 and how much we have in this case 13.1 in the corporation of the bank.

Speaker Change #134: So when you look at the business model, we publish wholesale, we publish retail, and we publish corporation plus margin for the market. So what happens when you do that? First, an automatic impact. I am allocating less capital in the business.

Milton Filho: I am allocating less capital to the business because I left from 12 and went to 11 and a half first. So, secondly, we leave the SELIC rate in the business. Even though I do the hedge of the working capital of the bank in several vertices, in the business model, we have the daily SELIC in the business. So any reduction in the SELIC over time has immediate sensitivity in the business and not in the corporation because the corporation is working with longer vertices.

Speaker Change #134: because I left from 12 and I went to 11 and a half.

Speaker Change #134: First.

Speaker Change #134: So secondly, we leave in the business the silic rate.

Speaker Change #134: Even though I do the hedge of the working capital of the bank in several vertices, in the business model we have...

Speaker Change #134: And the business so any reduction in the time has immediate sensitivity in the business and not in the corporation because corporation is Working with longer vertices since I allocated less capital in the business and I went from 12 to 11 and a half

Milton Filho: Since I allocated less capital to the business, and I went from 12 to 11.5, the allocated capital of the business being lower provides you with less interest because it has less capital, and SELIC dropped. And that's directly on the margin, in the NII. So when you look at the NII, it has an important component for the effect of working capital, whether it's the change from 12 to 11.5 or the structural drop of interest rates in the period. Those are the two main effects.

Speaker Change #134: The allocated capital of the business being lower.

Speaker Change #135: It provides you less interest because it has less capital and it's a leak.

Renato Jacob: Renato Jacob

Milton Filho: And the other effect that you just captured that is very important is that when we do the management of the business, we look at NII, and we look at the revenue of FIIs and services because a great deal of the cross-sell of the credit that is done in NII gets into the line of services and insurance. So there you have all the other businesses, whether it's the exchange rate and the fee of the investment bank, which is a very strong franchise.

Renato Jacob: Those are the two main effects. And the other effect that you just captured that is very important is that when we do the management of the business,

Renato Jacob: We look at NII and we look at the revenue of FIIs and services because a great deal of the cross out of the credit that is done in the NII, it gets into the line of services and insurance. So there you have all the other businesses, whether if it's exchange rates.

Milton Filho: So when you look at our growth, which is important in this quarter, there is a third effect that you have to take into consideration. A great deal of the portfolio was produced over the last few months. So it has an effect on the income that generates the NII that is lower. And there is the other effect that a great deal of the result is in the line of service and fees that balance that vision of profitability from the standpoint of the client.

Renato Jacob: And a fee of the investment bank, which is a very strong franchise.

Renato Jacob: So when you look at our growth that is important in this quarter, there is a third effect that you have to take into consideration. A great deal of the portfolio was produced over the last few months.

Renato Jacob: So it has an effect in the...

Renato Jacob: So the growth is at the end. You cannot capture fully those effects. There is a true effect of the capital that I mentioned, whether if it's 11 and a half,

Renato Jacob: So I allocate less capital and I give less remuneration of capital for the business and the interest rate that drops.

Milton Filho: So looking at that whole picture, you see the effect, and that's why the ROI, regardless of that, the ROI of the business goes up. And why does it go up? Because I have less capital allocated, so you can save more leverage in the relationship of 12 to 11 and a half. But I take that access to the corporation, and I keep the access to the capital, 11 and a half, until 13.1 with the effect of pre against the SELIC in the corporation and with the effect of the margin against the market. So that's how we publish the business model, and that's why you see that effect that is very specific on the whole. Thank you. Thank you, Yuri. Next question, Arnon Santander.

Renato Jacob: And there is the other effect that a great deal of the result is in the line of service and fees.

Renato Jacob: It is the vision of profitability from the standpoint of the client. Looking at that whole, you see the effect. That is why the ROI, regardless of that, the ROI of the business goes up. Why does it go up? Because I have less capital allocated, so you can see the effect.

Speaker Change #136: And I keep the excess of the capital, 11 and a half, until the 13.1, with the effect of pre, against the selic, is in the corporation, and with the effect of the margin with the market. So that's how we publish the business model, and that's where you see that effect that is very specific in the wholesale.

Milton Filho: Good morning, Milton. Good morning, Renato. Congratulations on the results. Revenue of 10 billion. A good number.

Speaker Change #136: Good morning, Milton. Good morning, Renato. Congratulations on the results. Revenue of 10 billion. Good number. The question is the portfolio of credit of you, the share of the

Milton Filho: The question is your portfolio of credit, the share of the interest rate has dropped. That is working with the risking that you mentioned. But maybe at this moment, you're going to go back to the appetite for risk for lower income.

Speaker Change #137: The interest rate has dropped.

Arnon: that is working with the risking that you mentioned, but maybe at this moment, you're going to go back to the appetite of the appetite for risk for the lower income. And how should that work with the Parcelado and Rotativo? Well, thank you, Parcelado. Thank you, Arnon, sorry.

Milton Filho: And how should that work with the Parcelagen Rotativo? Well, thank you, Parcelagen. Thank you, Arnon. Sorry.

Milton Filho: So we went to the point, the effect of risking has a lot of benefits, benefits for margin, and delinquency, but it has that perverse effect because it decreases, given the profile of the client, the penetration of finance on the credit card, whether if it's the interest rate on the credit card or the interest rates on the credit card, which is a parcelado. So we have a profile of interest rates that is different from the market.

Arnon: Okay.

Speaker Change #139: So you went to the point. The effect of the risking has a lot of benefits, benefits for margin.

Speaker Change #139: but it has that perverse effect because it decreases

Speaker Change #139: The propension of finance on the credit card whether if it's the interest rate on the credit card or the interest rates on the credit card

Milton Filho: If you look, we got to 14% of the finance payer portfolio with interest rates. And I always talk about the parcelado with interest rates. Of the 130 billion credit cards that we have, 86% of that portfolio doesn't pay interest, but we have the risk of credit, and we only receive the exchange that is in the service line. So that's the anomaly that exists.

Speaker Change #139: Which is a parcelado. So we have the profile of the interest rates that is different from the market. If you look, we got to 14% of the finance payer

Speaker Change #139: Portfolio with the interest rates and I always talk about the where's the interest

Speaker Change #139: Of the $130 billion of credit cards that we have, 86% of that portfolio doesn't pay interest rates, but we have the risk of credit and we only receive the exchange that is in the service line.

Milton Filho: Only 14 percent of that portfolio pays interest rates in the credit card. So what is our vision? First, we have to be very careful because we are always looking at the client, their needs, and we're trying to offer the best product in the best. Rayne Parth, So, the credit card product, it's not a product for financing consumption, it's a product for payment that is very, it's a way of payment that is very efficient, and on the other hand, as the client needs to finance themselves through the product, it's not the best product for financing, the client has to look at the other alternatives, the interest rate on credit card rotativo is not, It corrects the delay for the client for not paying the credit card and directs the client to home equity, whatever the credit line that the client has access to.

Speaker Change #139: So that's the anomaly that exists. Only 14% of that portfolio pays interest rates in the credit card. So what is our vision? First, we have to be very careful because we are always looking at the client, their needs, and we're trying to offer the best product in the best

Speaker Change #140: Ray Possible

Speaker Change #140: So the credit card product, it's not...

Speaker Change #140: A product for financing consumption. It's a product for payment that is very, it's a way of payment that is very efficient. And on the other hand,

Speaker Change #140: As the client needs to finance themselves through the product, it's not the best product for financing. The client has to look at the other alternatives. The interest rate on credit card rotativo is not...

Speaker Change #140: It should not be used for financing. It corrects the delay for the client for not paying the credit card, and directs the client to home equity, whatever the credit line that the client has access.

Milton Filho: Another credit line, therefore, our vision is that as the portfolio stabilizes, we might see an increase in the profession, an increase in time, but it's a portfolio with a risk profile that is different from what we have had in the past. The biggest impact on the P&L of the credit card is the delinquency, and the delay, but this is a client that is not paying and that you charge high rates. So, from the standpoint of the financial health of the result and the quality of the result, it's not a good quality.

Speaker Change #141: Another credit line, therefore. Our vision is that as the portfolio is stabilizing, we might see an increase in the profession, an increase in time, but it's a portfolio with the risk profile that is different from what we have in the past.

Speaker Change #141: The biggest impact in the P&L of the credit card is the delinquency, the delay, but this is a client that is not paying and that you charge high rates. So from the standpoint of financial health of the result,

Milton Filho: So, in the end, yes, we've been working with a prevention level that is lower, depends on the cycle, depends on the evolution of the product that we've been working to offer conditions that are more competitive and solutions of finance within the credit card chassis. This is an evolution, and after all, there might be an evolution with that, but it's the profile that dictates the rhythm. And because it's a portfolio of high, medium income rates, it has lower propensity.

Speaker Change #141: And the quality of the results, it's not a good quality.

Speaker Change #142: So in the end, yes, we've been working with a prevention level that is lower, depends on the cycle, depends on the evolution of the product that we've been working.

Speaker Change #142: to offer conditions that are more competitive and solutions of finance within the credit card chassis. This is an evolution and after all time there might be an evolution with that. But it's the profile that dictates the rhythm.

Speaker Change #142: And because it's a portfolio of high, medium income rates, it has lower prevention.

Milton Filho: from Bank of America. Hello, Nicolas. Welcome back to the call.

Milton Filho: Thank you, Milton.

Speaker Change #143: with us.

Speaker Change #143: Nicolas Riva from Bank of America. Hello Nicolas, welcome back to the call.

Milton Filho: Hi Renato, thanks and thanks Milton as well. Nice to see you guys.

Nicolas: Hi Renato, thanks, and thanks Milton as well, nice to see you guys. So Milton, I have a few questions on your bonds, on your tier 2's and your 81's, given that the call option approach is on the 29's.

Speaker Change #145: In November , and also on the 4 and 5 8s on the 81s in...

Milton Filho: So Milton, I have a few questions on your bonds, on your Tier 2s and your 81s, given that the call option approaches on the 29th of November and also on the 4 and 5 8s on the 81s in February. So far, you haven't been calling the 81s, but you can call on each coupon payment date. And also, looking at prices, it's interesting because it seems that the market is kind of assuming that you're not going to call the 4 and 5 8s in February; it's trading well below the call price bar.

Speaker Change #146: In February , so far you haven't been calling the...

Speaker Change #147: The the 81s but you can call in each coupon payment date and also looking at prices it's interesting because it seems that the market is kind of

Speaker Change #147: Assuming that you're not going to call the 4158s in February , it's trading well below.

Speaker Change #147: The 281s that you didn't call in the past are trading just above the call price and you can still call them every six months in each coupon payment date.

Milton Filho: But the 281s that you didn't call in the past are trading just above the call price, and you can still call them every six months on each coupon payment date. And then on the Tier 2s, I think in the past you have highlighted that even though you cannot say beforehand what you plan to do regarding the call option, the Tier 2s start losing capital treatment if not called, which I think gives you an incentive to call the 29s in November.

Renato Jacob: and Renato Jacob.

Milton Filho: to call the 29th in November . And looking at market prices, they're trading at the call price. It seems that the market is assuming you are going to call the 29th in November . So any thoughts you can give us regarding the call options on the Tier 2s and the 81s would be welcome. Thanks, Hamilton.

Milton Filho: And looking at market prices, they are trading at the call price. It seems that the market is assuming you are going to call the 29s in November. So any thoughts you can give us regarding the call options on the Tier 2s and the 81s would be welcome. Thanks Milton.

Milton Filho: Thank you. Thank you, Carlos. It's Nicolas Riva. It's always good to see you.

Speaker Change #148: Thank you for your question. Let me go through. So on day 81, we keep doing the same thing we've done.

Speaker Change #148: In the past decision, so we are looking also all the economics around, what would be the new price of new issue if we do and what would be the reset premium. So we believe that today we would pay at least 100 basis point more.

Speaker Change #148: If we exercise the call and try to tap the market, we find a way to win, so at least. So that means that whenever, on an economic way, we don't feel comfortable to exercise the call due to the impact,

Speaker Change #148: On the new issue, we want to exercise the call, the same logic.

Speaker Change #148: That we adopted all the other...

Speaker Change #148: We know that we have every six months the decision to be made. We're going to follow through. If we believe there is any change in the market or any situation that allows us to do it in a different way, we'll be more than glad to exercise the call.

Speaker Change #148: It's the case, but looking with the information we have today on the 81, we don't believe it's the case now due to the repricing and the reset that we have to do in those transactions.

Speaker Change #148: Now going on the Tier 2, we have some calls to be exercised in November .

Speaker Change #149: And we haven't made the decision yet, so it's very important to tell you that we're always analyzing what would be a new issue, if we can issue locally or abroad, where are

Speaker Change #149: And what is the size of the opportunity, what will be the new issue premium, what will be the new price if we have to tap the market?

Speaker Change #149: But it's very important to make it clear, we haven't made the decision on the Tier 2 yet.

Speaker Change #150: We are discussing that. There is a lot of discussions going on at this moment. Whenever we have this decision made, of course, the market will be the first one to know. And you are right. You have and you lose.

Speaker Change #150: The capability to use that for capital on the remaining tenor of those of those bones. So at the end of the day, we're going to take this in consideration in the decision.

Speaker Change #150: To be made so again. We haven't made the decision we are having at this moment is discussion

Speaker Change #150: Whenever we have this very clear inside the bank, we're going to release and let all of you know what will be our decision on the Tier 2.

Carlos Gomez: Thanks very much, Milton. Thanks, Nicolas. And for our last question, we remain in English, because we have with us here Carlos Gomez from HSBC. Hello, Carlos. Good to see you.

Milton Filho: Thank you. Thank you, Carlos. It's always good to see you.

Milton Filho: Thank you for your question. Let me go through it. On the 81, we keep doing the same thing we did in the past decision. So we are also looking at all the economics around what would be the new price of the new issue if we do, and what will be the reset premium? So we believe that today we would pay at least a hundred basis points more If we exercised the call and tried to tap the market with a new 81, so at least okay. That means that, in an economic way, we don't feel comfortable to exercise the call due to the impact of the new issue.

Milton Filho: We want to exercise the call the same logic that we adopted all the other Calls so we know that we have every six months the decision to be made and we're going to follow through and If we believe there is any change in the market or any situation that allows us to do in a different way We'll be more than glad to exercise the call if it's the case But looking with the information we have today on the 81 We don't believe it's the case now due to the repricing and the reset that we have to do in those transactions Now, going on the Tier 2, we have some calls to be exercised in November, and we haven't made the decision yet, so it's very important to tell you that we're always analyzing what would be a new issue, if we can issue locally or abroad, where are, and what is the size of the opportunity, what would be the new issue premium, what would be the new price, if we have to tap the market, but it's very important to make it clear, we haven't made the decision on the Tier 2 yet, we are discussing that, there is a lot of discussions going on at this moment, whenever we have this decision made, of course, the market will be the first one to know, and you are right, you have and you lose the capability to use that for capital, on the remaining tenor of those bonds, so at the end of the day, we're going to take this into consideration in the decision to be made, so again, we haven't made the decision, we are having at this moment this discussion, whenever we have this very clear inside the bank, we're going to release and let all of you know what will be our decision on the Tier 2.

Speaker Change #152: The uncertainties that you have, you are always negotiating with the government different aspects.

Speaker Change #153: of your activity. What is the focus now? Last year, we were talking on credit cards.

Speaker Change #154: What is the main thing that the banks today are discussing? Is it this BPA treatment? Is it still the card? Or is it IOC? What is in your mind right now?

Milton Filho: Thank you very much, Milton. Thanks, Nicolas. And for our last question, we will remain in English because we have with us here Carlos Gomez from HSBC. Hello Carlos, good to see you.

Speaker Change #154: Yeah, thank you. Good to see you, Carlos.

Carlos Gomez: Thank you for your words.

Carlos Gomez: And to know that for me it's always a pleasure to have the most quality time with you here to go through all the details about the bank. So thank you for your comments.

Speaker Change #155: So I would say that the DTA that we were having the discussion right now is the discussions that we had more, I would say, the past

Speaker Change #155: or previous mils.

Adadj: It's always discussions on CSLLL, if it's going to increase or not. I think it's very clear and Adage made it very clear recently that the idea is not to hike.

Speaker Change #157: the social contribution of the banks because you have to take into consideration that we have the highest

Speaker Change #157: Amounts or highest rates.

Speaker Change #157: When compared to other countries and other banks around the world, so...

Speaker Change #157: This is important to highlight.

Speaker Change #157: The DTA has been part of the discussions.

Speaker Change #157: Credit card is always going to be an ongoing discussion, always going to be an ongoing discussion, so I don't think we solved...

Speaker Change #157: The problem that structurally we have...

Speaker Change #157: But this is, I would say, an ongoing discussion. This topic will come back.

Speaker Change #157: We'll be a little bit quiet. We'll have more discussions.

Speaker Change #157: But the main topic, I would say, it's the DTA right now. There is no discussion on IOC, there is no discussion.

Speaker Change #157: The new reform on capital and gains, there is no discussion coming from that side.

Speaker Change #157: And there is the regular discussions that we have about general topics, the economy, the market, interest rate that we talk about.

Speaker Change #157: The fiscal side, so I would say regular discussions, but nothing that...

Speaker Change #157: Need to be highlighted here.

Speaker Change #157: So, very regular discussions and the common course of business, I would say.

Speaker Change #157: Thanks, Milton. Thanks, Carlos.

Speaker Change #158: And now we finish the Q&A session.

Speaker Change #158: We answer to all the analysts that connected today with the call, all the questions.

Speaker Change #159: Any questions that might come up through WhatsApp are going to go directly to the investor relations team, are going to be answered there. I give you the floor, therefore, to close our earnings call.

Speaker Change #160: Thank you Renato. Thank you for working with us. Thank you everyone that took part. Always a pleasure to be here with you.

Milton Filho: Thank you. It's good to see you, Carlos.

Speaker Change #161: We try to do a presentation that is very executive, so we have time to talk and discuss the issues, get into the details.

Speaker Change #162: With the most transparency as possible. You're never going to leave this call without answer. We're always going to take care of the quality and the transparency of the information. I wanted to seize this moment to thank you.

Milton Filho: Thank you for your words. And to know that, for me, it's always a pleasure to have the most quality time with you here to go through all the details about the bank. So thank you for your comments. So I would say that the DTA that we are having a discussion right now is the discussion that we had more, I would say, in the past or previous months. There are always discussions on CSLLL, if it's going to increase or not.

Milton Filho: I think it's very clear, and Haddad made it very clear recently that the idea is not to hike the social contribution of the banks, because you have to take into consideration that we have the highest amount or highest rates when compared to other countries and other banks around the world. So this is important to highlight.

Milton Filho: The DTA has been part of the discussions. Credit cards are always going to be an ongoing discussion, always going to be an ongoing discussion. So I don't think we've solved the problem that structurally we have.

Milton Filho: But this is, I would say, an ongoing discussion. This topic will come back, and it will be a little bit quiet. We'll have more discussions. But the main topic, I would say, is the DTA right now. There is no discussion on the IOC. There is no discussion on the new reform on capital and gains. There is no discussion coming from that side, and there are the regular discussions that we have about general topics, the economy, the market, interest rates, that we talk about on the fiscal side. So I would say regular discussions, but nothing that needs to be highlighted here. So, very regular discussions and the common course of business.

Milton Filho: Thanks, Milton. Thanks, Carlos. And with that, we end the session.

Speaker Change #162: To thank something that is very serious, we are very honored with the recognition that we've had from AI.

Speaker Change #162: Now we were recognized by you and the South Side and the Bi-Side.

Speaker Change #162: And all the categories of AI and we were very honored third year in a row that we are second year in a row that we are Recognized on all categories

Renato Jacob: And now we've finished the Q&A session, answered all the analysts that connected today on the call, all the questions, any questions that might come up through WhatsApp, through the, are going to go directly to the investor relations team, are going to be answered there. I give you the floor, therefore, to close our earnings call.

Speaker Change #162: Thank you.

Speaker Change #163: It doesn't make us rest in our laurels. No. Responsibility continues. It increases. We want to do more, to deliver more, and to be ever closer to you with a maximum transparency, delivering the data, information quality on the books, quality on our calls and publications, quality on the Itaú Day, which is so important.

Speaker Change #163: And we try to open there as most that we can we always try to give strategy telling you more But since we have that relationship with the investors in the market

Speaker Change #163: If we are in doubt, we make a mess, you know.

Milton Filho: Thank you, Renato. Thank you for working with us. Thank you everyone that took part. Always a pleasure to be here with you. We try to do a presentation that is very executive, so we have time to talk and discuss the issues, and get into the details with the most transparency as possible.

Milton Filho: You're never going to leave this call without an answer. We are always going to take care of the quality and the transparency of the information. I wanted to seize this moment to thank you, to thank you. It's something that is very serious.

Speaker Change #163: We have trust on the long term.

Milton Filho: We are very honored with the recognition that we've had from IEI. And we were recognized by you, and the South Side, and the Bi-Side, and all the categories of AI. And we were recognized third year in a row that we were second year in a row that we were recognized in all categories. But this doesn't make us rest in our laurels. No.

Milton Filho: The responsibility continues. It increases. We want to do more, to deliver more, and to be ever closer to you with maximum transparency, delivering data, information quality on books, quality on our calls and publications, quality on Ita Day, which is so important, and we try to open it as much as we can. We always try to give strategy, tell you more, but since we have that relationship with the investors and the market, if we are in doubt, we make a mess, you know.

Speaker Change #164: Thank you for your recognition, and everyone that is watching, our commitment to the bank is top, with the organization, with the country, and we are going to diligently work to deliver solid results, consistent results.

Milton Filho: We have trust in the long term. Thank you for your recognition and everyone that is watching. Our commitment to the bank is top of the organization and the country, and we are going to diligently work to deliver solid results, consistent results, and especially quality resources. Always thinking on the long term, never sacrificing the short term to deliver results, whether it's growth in revenue, or reduction in expenses, we are always investing in the franchise and working with a hundred year anniversary for the next hundred years. Thank you for your patience and time and dedication to the call and the questions. Have a nice day. We will see each other in the one-on-one meetings and see you on the next call.

Speaker Change #164: and especially quality results.

Speaker Change #164: Always thinking on the long term, never sacrificing the short term to deliver results, whether if it's by the growth in revenue, the reduction on expenses, we are always investing in the franchise and working with a hundred year anniversary for the next hundred years. Thank you for your patience and time and dedication to the call and the questions.

Speaker Change #164: Have a nice day. We will see each other in the one-on-one meetings and see you on the next call.