Q3 2024 Banco Santander (Brasil) SA Earnings Call
Speaker Change: You have joined the meeting as an attendee and will be muted throughout the meeting.
Speaker Change: Bondiatodo, obrigado por estar en conúsco para acompanhar a nossa video conferencia de resultado de 3.3m de 2014.
Speaker Change: We are here to hear our call and we will see today the three steps. First, our Mario Leao, we will talk about the first steps of the period. I will show you the progress of the next three steps.
Speaker Change: After our successful Gustavo Leeros, we will make a detailed analysis of our presentation.
Speaker Change: and Percent, Teremos Accession, who asked the response.
Speaker Change: I'm going to pass now to some instructions. We have three types of oil in the body. All the body, all the body, the English or the original. To choose a solution, you can click on the button to feel inferior to your body.
Speaker Change: To make a question, click on the button from the mouth icon, which is also in the front part of the screen. The presentation, let's do it now, is already available for the download on our website. And now, I'll talk to Mario for the presentation.
Mário Leão: Ola, bon dia, todas y todos, un parzetta que congo seis
Speaker Change: 10, 4, 5, now
Mário Leão: I'll start with the result of the semester, the numbers of the messages, then I'll pass a quick walk, for some aspects that we're going to do here and obviously.
Mário Leão: and the Tatao is a great team.
Mário Leão: For how I know and what I'm going to do.
Mário Leão: We show you the number, we have a 3B, 660, we have a 3B, 660, we have a 3B, 770.
Mário Leão: It's a new day of the two days of the three countries, we have done 10, 10, 100, 3, 2, 3, B, 1, 3, for the second we do the new two days of the two days, and it's more important in the base of the International.
Mário Leão: [inaudible]
Mário Leão: who created the reality and wanted to have more.
Mário Leão: As we have historically, we have a lot more to talk about, more and more, more to the most, to the most important thing, as we are considering the last few years. So, we get to the hot rate of 17% of the relevant growth in the country, 1.5% and in the worst.
Mário Leão: Some of the big lines we do not have a comparative base of the third line we have a more finance that creates 16% and only for a performance in practically all the lines in the different volumes, we create more finance in the creative way possible.
Mário Leão: We believe we have to be a commercial, we believe we have to be a client.
Mário Leão: 16-100, as a carter, just in the 16-100, so we're in the background producing more in the image of a low-degree, low-degree, low-degree, which creates more growth in the middle of the church, we can see more of the financial image, well, but what is that?
Mário Leão: Which is aligned with our strategy of extracting more and more value from our capital base. This capital will obviously continue to expand, but we want to increasingly extract value and thereby accelerate the profitability agenda.
Mário Leão: We will see in a little while with Gustavo that also in the quarterly basis we have a growth of almost 3% with a very positive performance in several of our lines which reinforces what I have commented here with you for a few years of our absolutely focused strategy of diversification of the result line, diversification of business macro portfolios.
Mário Leão: We also have a positive performance.
Mário Leão: in Captações.
Mário Leão: But the quality with which we are building this number, we will detail in a little while for you.
Mário Leão: For me, the most important thing is that we could be growing to two digits in cash withdrawals with a lot of ease, but we are making an effort to change the mix of cash withdrawals in the bank, we are making an effort to go much more to the retail sector, much more to the physical person, and in what we pay for cash withdrawals in deposits and letters, we are lowering our funding cost in a material and fast way. So, our expansion of financial margin has a lot to do with also knowing
Mário Leão: how we allocate the capital of the assets and how we also allocate our balance of acquisitions.
Mário Leão: And to finish the column in the middle, I have a list of credit costs, of provisional payments. We have a provisional payment that grows by 5% year-on-year.
Mário Leão: which is, again, below the growth of the portfolio, which shows that we are in an annual and also in a quarterly management going pretty well. Just going quickly to the right here, we comment on the...
Mário Leão: as great strategic pillars. These are themes that we've been talking about, and we're going to detail each one of them a little more. The first one couldn't be different. We continue with the agenda, which is an agenda that I comment with you outside, but obviously it's our agenda every day here in Santander. We call it Obsession.
Mário Leão: mainly because we want to be the most present bank in our clients' lives. We'll talk a little bit more about that.
Mário Leão: Transactionality is increasingly key to diversifying our business. We don't want to demonize credit, obviously. Credit is an important element of our results, but we want to have a diversified credit. We had a very concentrated credit in the lower-income ranges over the years. We want to have a diversified credit, but we also want to have much more.
Mário Leão: We want to have much more passives and other results.
Mário Leão: We are going to talk a little bit about investments, which has been a very important pillar of ours in recent years and continues to be. I will bring here some data that shows that we are clearly moving in the right direction. And we bring a new element, yes, which is a new positioning of ours with small and medium-sized companies, a new big campaign, a new signature, a brand relaunch, which I will comment on a little later.
Mário Leão: This is a new slide, I'll go through it quickly. But it's just for us to do, in a way, a recap of what the agenda was in the last four years. The last three years, mainly, were an agenda in which we bring a new strategic definition focused on diversification, I've already mentioned that.
Mário Leão: We focus on some big pillars, and from these pillars we draw where we have to invest more. So, clearly, we know how to invest more in the investment pillar. We make a series of investments, create an advisory area, which is the AAA, we make a revamp in our high-income area, which is the Select,
Mário Leão: We invest a lot in technology and now we have a portal of investments that we never had. So this is one of the examples. In commissions we focus on several initiatives, some of them are already starting to bear fruit.
Mário Leão: As you can see, our insurance account has evolved a lot, but we are also evolving a lot in consorts, we are evolving, of course, in the attack agenda, with a challenging year in some aspects, but we are also building an investment bank that we have never had. So we focus on big pillars and start investing in these pillars, and we will comment on some of them in a little while.
Mário Leão: We anchor this redesign of the portfolio with a vision of profitability recovery. So, you will hear me sometimes talk about capital allocation disciplines, about focus on return. We want to grow, but first we want to be more profitable than being bigger. We will be both, but in order we want to be more profitable, and with that build a much healthier growth agenda.
Mário Leão: We do all of this with enormous use of technology. Of course, technology and banks are not dissociable things. You will see technology mentioned here on several pages. And I prefer to do it this way than to have a page of technology as if it were a separate theme. Technology is embedded in everything.
Mário Leão: And we, in these three years, did a relevant risk reduction work and a portfolio reconfiguration. From now on, of course, we continue the evolution and continue to extract value from these four blocks that I mentioned, but we go deeper into three messages that I wanted to leave here and that we will develop with you over the next three months.
Mário Leão: The first is that, in fact, the focus, if I could synthesize, the focus of what we want with our clients is value creation.
Mário Leão: We want each client to feel valued, and not in a homogeneous way. I want each client to feel, in fact, in a unique and exclusive relationship with Santander. Be it a massive income client, be it a private client, be it a large company, or a small micro-entrepreneur.
Mário Leão: We're going to do this, of course, supported by a lot of technology. Otherwise, it's impossible to cover in a hyper-personalized way, as we say here, our massive client. We want to hyper-personalize our relationship with all the PFs and PJs we have. We have more than 65 million clients, so we can only do this with a lot of technology. The technology, of course, helps the client's experience, the UX that we talk about here, and also the reduction of the cost of service. We're going pretty fast on this agenda. We're gaining massively. I'm going to comment on an important reduction year on year. We have to do a lot more. And again, the capital allocation discipline, with a focus on ROE recovery.
Mário Leão: To the right are our pillars, which you already know, so it's hard to recapitulate very quickly. Client centralization. These are five strategic pillars of Santander in Brazil, and you will hear us repeating this.
Mário Leão: Strategy, we can't change each tree. So we are constantly looking for these 5 pillars.
Mário Leão: We are increasingly diversified as a portfolio. We already have a positive legacy of experience in credit, of experience in efficiency, and we have to take it to the next level.
Mário Leão: And of course, we have the people and technology element as the key to our strategy.
Speaker Change: Let's talk a bit about centrality in the client.
Speaker Change: Here on the left we have only the images of these three great campaigns that we did this year. This year Santander starts to sign in a different way, it starts now. So the 7 or 8 year signature that we used all this time, had its purpose, we start to sign in a different way, in a much closer way, much more human.
Speaker Change: And it starts now, the campaign that we launched exactly 6 months ago, 6 months and 1 day to be exact
Speaker Change: because it derives from the Santander Select to Começa em Você, which is what is here in the middle. And now, weeks ago, we launched our new positioning of small and medium-sized companies, which I will comment on later, which is the message of Começa every day. Basically, Começa is the big motto, the big message that we want to send forward to customers, which is, I want to be with you every day, I want to be with you starting.
Speaker Change: Here in the middle, we comment on some of these strategic pillars of this integrated client view. So, to reinforce, we like the client who only consumes one Santander product, but we want, in fact, to have a complete relationship with this client. So, more and more, we want to convert the clients that we call monoproductists, the clients that have one consumption, so that they are current clients, the bank that has a transactional relationship with us.
Speaker Change: So I'm going to convert more and more the client that is pure real estate into the card client, the client that is pure card into the account client, the client that doesn't do the PIX with us, despite consuming the card, and so on.
Speaker Change: For this, we are evolving in a very accelerated way in technology. The entire industry is doing this. We are trying to differentiate ourselves.
Speaker Change: The most important message I want to leave here is that credit is still a key, of course, but credit is a means to reach the client. It is a means to reach the transactional relationship and the main relationship with the client. So I want credit to be well-precified, and it is being better and better precified. You will see in the evolution of our volumes and spreads that we are evolving positively our precification.
Speaker Change: But I want the credit to be a means to get to the end, which is the main relationship with the clients.
Speaker Change: We have evolved in the NPS, here I quote P.F., evolving 11 points in two years, it is not less. With the great braking we gave in 2022, we had a drop in the NPS, as we measure internally and also in the competitive, and we are recovering a lot in these years, with an appetite that I would say has not changed materially, but with a much better customer experience. This is the best level of NPS and P.F. that we have ever had, and obviously we are much more ambitious.
Speaker Change: We have a UPS of 80 in the stores, this is the UPS of service, which measures how our new model of stores, in which we serve all customers and no longer has the sense of the store to be the owner of the customer base, the customers are now from the bank, from the PF segment, from the PJ segment.
Speaker Change: We are receiving much better and better than we have ever received.
Speaker Change: Here we zoom in on transactionality. There are great messages here. I will focus on a few.
Speaker Change: Obviously, transactionality, that is, we are present in what the customer consumes, in what the customer transacts on a daily basis, is possibly the main definition of principality. We have three major blocks of principality here in Santander. We call it transactionality, like this first one, which is valid for everyone.
Speaker Change: as a real estate agent and a vehicle financier.
Speaker Change: And we have a third block, which is worth for some, which is the investment block. But transnationality is the most common block.
Speaker Change: We are already applying for the debit cards and next year we will enter the credit. It is all designed in the cloud and will bring huge gains in efficiency, flexibility, agility and cost.
Speaker Change: So I wanted to mention it here because it's a great example of what we're doing together with the group. We have our Celeste Global, which is our international account platform. And here, talking a little bit about transnationality...
Speaker Change: We have brought to the PF the dimension of the Crossell increasingly stronger. So here is a data worth mentioning. From a base of 100, we increase to 107.
Speaker Change: how much a commission means for the total revenue. In other words, we increase the commissions by 7 points more than the rest, which means that we are, in fact, moving towards diversification.
Speaker Change: But we improve our NPS, our no-picks, by 16 points year-on-year. It's not that it was bad, it was at 60 and high, but now it's at 83. So, obviously, it's a clear evolution. We have a pick with two stages of the journey. So, here, just to quote for you, that even what already worked well, we keep investing a lot and we want to be the best experience in the market.
Speaker Change: Speaking of credit, let's recap a few messages.
Speaker Change: I'm going to start with the bottom right, with the financial side. Everyone is following closely. We are the biggest financial side.
Speaker Change: and continues to be a vehicle for Brazil. We have a growth of 20% of the portfolio year on year. We have this with over 90% decreasing. We have liquid revenues growing 33% year on year and flat costs.
Speaker Change: It's not easy to grow 20% of the portfolio year on year with planned costs, because there are a lot of variable costs. This also shows our efficiency journey, of always trying to do more with less or, at most, more with less.
Speaker Change: So the financial side is still doing well. The NPS is 91, which makes us very proud.
Speaker Change: We have partnership with almost all of the great mountaineers in Brazil, 6 out of 10.
Speaker Change: and we have a deal with a bank that grows almost 100% year-on-year, just to give you a number.
Speaker Change: Only this year, Financeira will bring more than 500,000 clients, which would be Financeira's monoproducts, and will become Bank's active clients. So, our journey of activating and capturing clients goes through Financeira.
Speaker Change: of a base of a year ago, the liquid recipe, that is, the raw recipe, minus the credit cost, goes up.
Speaker Change: 113%, so we went from a base of 100 to 213, which means that we are, indeed, doing our de-risking with an increasingly healthier portfolio. And the cost base also drops in this year, 12 points. So we are opening a very positive jaw in how we deal with the massive segment. And here, quickly, the comment from Select. Select continues to grow in its participation.
Speaker Change: and, of course, the client's profitability is much higher.
Speaker Change: Again, credit, to sum up, is a very important element of the portfolio, but, more and more, the message here is that it is a complementary element of the offer as a whole. Credit is important, it has to be well specified, it has to be well directed in terms of client quality, in terms of duration, in terms of volume, but, obviously, it has to be a goal, part of a goal, which is the greater transactional relationship that I want to have with our clients. And we will continue to grow credit focused on capital returns.
Speaker Change: In closing, I'd like to say a few words about hyper-personalization. We'll talk more about that later. But first, I'd like to say that...
Speaker Change: by client, to give time by client, to give volume by client, covering from the massive to the most sophisticated client of our corporate universe as well.
Speaker Change: Very fast investments here, on the right, our bull. Now red, our bull from the bull, from our digital broker.
Speaker Change: We did the rebranding of Toro this quarter. We are bringing more and more Toro as part of an offer that we call complete and integrated between Toro and Santander.
Speaker Change: Santander brings the specialized human channel, represented by the AAA, by our own office of advisors, but also by our high-income, our private and also our PJ.
Speaker Change: And Toro brings the best digital experience of digital brokers in the market. The two offers are getting closer and closer. We start selling Toro here in the Santander canals. And with this we are seeing an even greater increase in the volume of what we were doing well in Toro, more independently.
Speaker Change: 23 bi, this is an increase of almost 30% year on year.
Speaker Change: and, obviously, the growth, year on year, above 100% and a liquid capitalization per shareholder of almost 4 million in the quarter, which is, compared to the market price, a very powerful capitalization. All this with a high NPS and all this directed to this great pillar, which I want it to be, and there are more and more investments here in the bank.
Speaker Change: Here's a quick look at our new position in small and medium-sized companies. You'll remember that at the beginning of the year, we launched a new service model in which we have the specialists of small companies, which we call Zoom companies.
Speaker Change: These specialists are no longer inside the stores. We took the specialist out of the stores and now we have the specialists wherever, wherever it matters most, which is in the customer's home. So our specialists, who are now owners of micro-regions,
Speaker Change: that we standardized a few weeks ago, in which we seek to engage PJ clients, small and medium-sized companies, in a much more powerful way than we have ever done, with a complete solution, with a reward journey.
Speaker Change: together with this Human and Close Attendance that we had already launched at the beginning of the year and with the rescue of a...
Speaker Change: for these clients, legal people. With this, we intend to give an even stronger boost in the direction of doubling our size in small and medium-sized companies, legal people.
Speaker Change: We have been doing well in this segment. It's not linear, as I always say, but we have an ambition to have a business that is twice as big as it is today. And this step, the new value chain, is a fundamental step in this direction. With that, now I call Gustavo to do the revision of the numbers and come back here to Q&A. Thank you.
Gustavo Leeros: The financial margin continues to expand in the quarterly and annual comparison. We grew by almost 16%, which reflects the evolution of our strategy in clients and markets.
Gustavo Leeros: In the quarter, the margin of customers perfumed well, with the prioritization of more profitable lines and segments, which also resulted in an increase in the spread over the period.
Gustavo Leeros: On the market margin, we observed a better performance due to the greater result of the scissors operations.
Gustavo Leeros: We are committed to sustainable expansion in the long term, adopting an active management of risks, discipline in prices and technical rigor in the allocation of resources.
Gustavo Leeros: In the next slide we will focus on the credit card and in the quarter it showed a slight drop as a result of the discipline in the search for greater profitability.
Gustavo Leeros: We have seen an increase of almost 11% in retail, while in large companies we remain focused on profitability, an approach that has been maintained since the second quarter of 2023.
Gustavo Leeros: In relation to the physical person portfolio, we had an evolution of 0.8%, with a highlight for products of higher transactional value, such as cards, which grew 2.5% in the quarter.
Gustavo Leeros: Even in cards, we have shown growth with quality, observing higher concentration in the average and high income. The spending, as mentioned, has increased due to the expansion and penetration of the base.
Gustavo Leeros: At Consignado, we adjust the productions in face of the pressure on profitability caused by the opening of the interest rate curve and the rate tests.
Gustavo Leeros: On the other hand, the vehicle financing market still shows good dynamics, and we grew approximately 5% in the quarter.
Gustavo Leeros: And as mentioned before, our portfolio is well-balanced in terms of credit quality.
Gustavo Leeros: In small and medium-sized companies, we have seen an important evolution of the 2% portfolio in the quarter, with a special focus on small and medium-sized companies.
Gustavo Leeros: In this sense, it is worth noting that we are prepared to advance in this segment with quality and an adequate pace.
Gustavo Leeros: Moving on to the next slide.
Gustavo Leeros: We showed the performance of our captures, as already mentioned.
Gustavo Leeros: We recorded stability in the quarter, as expected, with a dynamic management of liquidity and price discipline in the passives. We continue to advance in the improvement of the segment mix, with the physical person growing 2% in the last 12 months.
Gustavo Leeros: We have also optimized the investment mix.
Gustavo Leeros: and costs with the issuance of subordinated financial letters at the same time in which we communicate the tier 1 call with liquidation scheduled for November.
Gustavo Leeros: To conclude this slide, the relationship between credit and deposits remains at the lowest levels in history, reaching 93%.
Gustavo Leeros: Next, I will show the performance of our commissions.
Gustavo Leeros: This semester, we have once again recorded the highest levels in history due to our strategy of diversifying recipes, which has been progressing very well.
Gustavo Leeros: We recorded a growth of 3% in the quarter and 13% in the year, with a good performance in practically all lines.
Gustavo Leeros: Securities, Currency and Asset have shown increases in the quarter.
Gustavo Leeros: as well as a significant evolution compared to the previous year.
Gustavo Leeros: Within the line of others that you can see here, the greatest evolution in the quarter is attributed to the good performance of capitalization.
Gustavo Leeros: In the next slide, we will discuss the quality of our assets, in which we kept the PDD stable in the quarter, resulting in a credit cost of 3.7%, with a reduction of 60 basis points in 12 months.
Gustavo Leeros: The NPL Formation performance was positive, which shows the best quality of our origination, reaching 1.1%.
Gustavo Leeros: Due to the better quality of the safras, the renegotiation portfolio already has a reduction of almost 5 billion in comparison to the third quarter of 2023, and we observe a decrease of 130 basis points in relation to the total portfolio of the last year.
Gustavo Leeros: Next slide.
Gustavo Leeros: We will deal with a detailed view of the evolution of our Nadim Plenc indicators.
Gustavo Leeros: Our concession is still well balanced and the portfolios are totally square, as I said.
Gustavo Leeros: Both short-term and long-term indicators remain practically stable.
Gustavo Leeros: Inadimplência's growth in SMEs is partly due to the renegotiated portfolio I mentioned earlier, mainly in the segment that covers companies with a smaller turnover.
Gustavo Leeros: of up to 3 million and for the additional pressure in the segment of large companies due to the case of judicial recovery that you have seen in the media.
Gustavo Leeros: The provisions and indexes of controlled inadimplency allow the absorption of these events without major impacts.
Gustavo Leeros: And I stress that the short-term indicators, which are adjusted, suggest a more positive trend forward.
Gustavo Leeros: In the next slide, I will detail our expenses. We continue to advance in our search for efficiency, focusing on cost control.
Gustavo Leeros: During this quarter, we recorded the partial effect of the new decision.
Gustavo Leeros: which had a 4.6% re-adjustment, impacted the expenses on staff.
Gustavo Leeros: In administrative expenses, the increase is related to the expansion of our business, which is good. And the growth of expenses was below the revenues, contributing to improve our operational leverage.
Gustavo Leeros: and we had a sequential improvement in the efficiency index, which had a drop of 3.6 percentage points per year.
Gustavo Leeros: To conclude the results session, I will talk about our DRE. We observed an increase of 15% in total revenues compared to the previous year, driven both by the NIA and by the positive evolution of commissions.
Gustavo Leeros: In relation to the provisions, we registered stability in the quarterly comparison and slight increase in the annual comparison. And we kept a rigorous control of our expenses, resulting in a profit of 3.7 billion.
Gustavo Leeros: This result corresponds to an increase of 10% in the quarter.
Gustavo Leeros: We end the third quarter of 2024 with an increase in profitability, showing a ROE of 17% and principal capital of 11%.
Gustavo Leeros: Finally, I would like to emphasize that we remain focused on the gradual recovery of our results, which have evolved according to our expectations, and our goal is sustainability in the long term, with solidity and consistency in the results.
Speaker Change: With this, I conclude my part of the presentation and give the floor to Mario for the final considerations.
Mário Leão: Thank you, Gustavo. Here, just to reinforce, so we can jump right to the Q&A, to reinforce four or five great ideas that I wanted to leave, that we covered throughout the presentation. First, again, the main thing is to be the most present bank in the lives of our customers. So, this is the message that, when I'm walking around Brazil, trying to talk to customers, listen to customers and not customers, the message has to be this, I need to be the most present bank in your life. And everything, deep down, leads to this. It starts with the customer and we design digital strategies for the future.
Mário Leão: Second big point, this agenda of principality, again in the internal jargon, this agenda only happens if we are absolutely embraced with technology. I spoke this morning with the bank employees in our internal broadcast
Mário Leão: Technology doesn't deserve a page or two. Technology is absolutely key.
Mário Leão: is a business, is a client, and if a big bank like Santander, digital, multi-channel, doesn't understand this, we won't be able to have the growth agenda that we seek to have. And we will get there.
Mário Leão: Third, we want to complement through technology, through human experience, we want to deliver value to our customers, with the perception, from the client, not from the bank, more and more clear, this is valid for investments, this is valid for the use of the card, this is valid for how we support in non-financial issues.
Mário Leão: who are becoming more and more relevant in our offer.
Mário Leão: We are aiming to speed up our profitability growth agenda with great focus, as we have shown, and we are working to continue showing throughout the next three months until we reach a level far above what we are now and, without a doubt, at that moment, continue working to seek more.
Speaker Change: To conclude this Q&A, we are happy to publish it. It is a concrete step in the right direction.
Speaker Change: with quarterly growth, inter-annual growth, an extraordinary quarter, a quarter, as I usually say, quite clean, and we are very happy with the progress and with what comes ahead, no doubt, even more. So, with that, I'll pause, I'll call Gustavo so we can do the Q&A, Camila, with you.
Camila: Thank you, Mario. Thank you, Gustavo, for the presentation. We will now start the Q&A session.
Camila: From now on, you will be able to take your questions with us. To do this, just click on the hand icon at the bottom of your screen. We will answer these questions in the language in which they were asked. And once again, I ask that each analyst ask only one question so that everyone can participate.
Speaker Change: We are going to start now with the XP Investments with Matheus Guimarães. Matheus, good morning. Welcome.
Speaker Change: Mateus, we are not arguing.
Speaker Change: Not yet.
Speaker Change: Not yet!
Matheus Guimarães: Now, can you hear me better? Now, yes. Perfect. Well, sorry. Thank you. Congratulations on the results. Thank you for the opportunity to ask. I think the third quarter is a materialization of many of the things you've been pointing out in the last three quarters. When we look ahead and, aligned with this macro scenario, a little more uncertain, what can we expect in terms of growth, especially in the credit portfolio? I think it would be nice to have a color and hear a little from you.
Speaker Change: Thank you for the question.
Speaker Change: Here I start, Gustavo can complement.
Speaker Change: What we did this quarter was, we had a side step, in a way, of the portfolio, a slight decrease, but you see the dynamics.
Speaker Change: portfolio-to-portfolio, in which we...
Speaker Change: accelerates where we believe there is marginal profitability.
Speaker Change: and where there is a marginal cross-sell for us to get.
Speaker Change: and in some portfolios, there are clear punctual effects in large companies, as Gustavo mentioned.
Speaker Change: of a specific name of the attack, in the old case, there is the subject of the exchange, but still we would have fallen into the category of large companies. So, what was this TRI? I think it was super clear, it was a...
Speaker Change: a balancing of our capital, which continues to grow, in the direction of the portfolios where we see the ability to have marginal profitability, either in the credit operation itself or in the cross-sell.
Speaker Change: What are we going to do from now on? Exactly this, in an increasingly clinical way, increasingly meticulous. I will give some examples here to be able to materialize.
Speaker Change: We've grown a lot over the years, and we've earned a lot of money in the Consignado.
Speaker Change: maybe the biggest in the market, and has everything to grow in the private sector, and the private sector continues to function quite well in terms of profitability.
Speaker Change: But in part of the public, and predominantly in the INSS, the consignate on the margin does not have the level of profitability that we consider compatible with what we want for our portfolio.
Speaker Change: So, the short answer to your question, which is great, is that we are going to keep growing as a whole.
Speaker Change: But some portfolios will potentially be more for flat or fall.
Speaker Change: And maybe the NSS contract is one of those cases, because the profitability, the way it was compressed between a funding cost and a mid-term interest rate...
Speaker Change: which is growing, as you can see, 20% year on year and I have no desire to slow down the economy.
Speaker Change: Small and medium-sized companies have a lot of sub-portfolios there, but I still want to grow small and medium-sized companies. I already talked about the ambition of doubling in a few years. Doubling is not doubling the portfolio per se, it is what the business as a whole grows, and it is a business that is highly cross-sellable, with the excuse of the expression, and that I can do a lot of commission and a lot of passive as well. So, and big companies? Big companies is a good question.
Speaker Change: We're going to be selective. The good news is...
Speaker Change: As we have been very rigorous in marginal profitability in the last year and a half, I would say, in large companies, our portfolio has almost constantly fallen on the margins in large companies.
Speaker Change: First of all, we haven't lost revenue, so we've been able to do a better cross-sell in big companies. I'm producing more with the same RWA base. I'd say that in big companies I'm producing more with less RWA. And this is a positive agenda. Of course, when I have the opportunity, when the capital market dries up a little, when the competition as a whole in big companies becomes a little healthier in terms of price,
Speaker Change: I will be much more light and dry to be able to expand again. It's not a credit artistic issue, much less a capital issue. It's a matter of opportunity and disciplined allocation of RWAs. I hope I have answered the question.
Speaker Change: and Gustavo Viviani.
Speaker Change: No, of course not. Thank you very much, Mario.
Speaker Change: We will now go to the next question with Yuri Fernandes from JP Morgan. Hi, Yuri.
Yuri Fernandes: Camila, good morning. Mario, Gustavo, congratulations on your improvement trajectory.
Yuri Fernandes: I would like to focus a little more on your equity, on the balance.
Yuri Fernandes: We saw that this trio had an impact, I think of a B300 already liquid of tax, of some very old cases, right? I'm talking about Banespa here, I think of...
Speaker Change: There is a fight between PLR and retirees here. I would like to understand if this is what is bringing your main capital, this drop of 20,000,000. I think that's the first question.
Speaker Change: And if you could give us a context of what this is, if we should see other old cases like this impacting...
Speaker Change: I can only remember PIS and COFINS, which was more recent. But just to understand a little bit if we should see these surprises in IPL. Because apart from that, I think at PNL everything was very good, right? It's just this issue of the book that caught my attention. Thank you.
Speaker Change: Thank you, Yuri.
Speaker Change: Thank you for always looking and commenting on capital. It's a level of diligence that we like a lot. So thank you for the challenge. The question is great. So this case, to name it, is a case of Santander and Banespreve, which is our presidential vehicle, as the name says, at the time of Banespa, with an association called Afabesp.
Speaker Change: This is a case from 1996, Yuri, so some of you... I entered the market this year, so many of you certainly weren't even in the market yet. This is a 28-year-old case.
Speaker Change: We could have simply followed the derivative provisioning of the homologations.
Speaker Change: But we took an attitude that, again, is allowed by a bank that has an organic result, an organic capital that behaves in this case.
Speaker Change: material for each of them, in a total gross of 2.7 billion reais.
Speaker Change: We work a lot on this agreement. Then, from the moment the agreement is aligned, they work within the association, the lawyers, to bring adherence, because the agreement is not... it is for adhesion. We get 90% of adhesion, which is quite high, given that we are talking about...
Speaker Change: of older people, who are not always accessible. And this connection...
Speaker Change: makes a total of 2.7 become approximately 2.4, I'm talking about sedon numbers, which, in a liquid form, generates an allocation of capital of 1.3 billion, which you correctly mentioned.
Speaker Change: So, in summary, it's a very old case that we decided to solve now, and not leave it raw for the next few years.
Speaker Change: We had a super close follow-up of this through our videos and we decided to take this step to wake up and recognize now, in the third trick, when the adhesions actually happen. The payment, by the way, was now in October and we are capturing most of it in our select, in the triple A, so the money is coming back to us in investments.
Speaker Change: which is directly recognized in the OCI, which is the equivalent of the Brazilian OCI. This is obviously debated ad nauseam and reinforced with internal, external, global auditors, etc. And we are quite comfortable with this regulator. So, the accounting is correct. It has to do with, I would say, the resolution, comprehensively speaking. The adhesion was 800%, so you will ask, what about the 10%? The 10% will remain in accrual, but there is a much smaller materiality, obviously. We have provision for this. This will appear over time. So, we do not expect something in this case that is material. And we do not have other cases of materiality, Yuri, which was the second part of your question.
Speaker Change: that should appear and decisions that we have to make in the next three months. This was a great old case that could have been of many more millions and that we are here cutting at an acceptable level and putting a result in the balance in the case because we could do it and preferred to do it now.
Speaker Change: Of course, Mario. Thank you for the technical answer. Thank you.
Speaker Change: We now go to a question from Banco Safra with Daniel Vaz. Hello Vaz, good morning.
Daniel Vaz: Good morning, Camila. Good morning, Mario and Gustavo. Thank you for the opportunity to ask questions and congratulations for the trajectory of your results.
Daniel Vaz: Looking at your portfolio, especially the trajectory part,
Daniel Vaz: You have the consumer finance gaining more and more relevance as a whole. So, the financial side is part of it. And allied to this trajectory, we have 4966, the regulation that should come in now in January.
Daniel Vaz: and it must bring a greater provisional need in the origination of these vehicle financing. So, you have a loss-given default that is increased because of a recovery asset that you bring to the present value. So, how have you worked with this impact? I would like to understand...
Daniel Vaz: the impact on your recurring level of supply and if your main capital, which today is a little below the evens at 11%, if this has any hit that we should work on next year. Thank you.
Speaker Change: To say that there is no impact would be to underestimate the evolution of regulation, so obviously there is some impact.
Speaker Change: But imagine that this, over the course of 2025, will be something that is absorbable and will be absorbed over the years. So, Gustavo. So, about the logic of the portfolio, it's valid for the financial one, but for all portfolios, right? So, we've been operating for many years with the FRS-9 normative of the group.
Speaker Change: Now we're going to apply 4966.
Speaker Change: It is based on all aspects of the norms that we operate. So we don't have surprises, I don't know if... Maybe it was the angle of your question, but we wouldn't have surprises...
Speaker Change: in what we are producing in the financial sector applying 4966. So, as we use SRS, we know practically what the impact of 4966 is today.
Speaker Change: in the decision-making of the marginal portfolio for all the portfolios that we do, we do for all the portfolios,
Speaker Change: Portfolio e Cliente
Speaker Change: We apply what we expect of performance based on the standards we know and we also use a lot of our FRS9 experience.
Speaker Change: I don't...
Speaker Change: I think that was the angle of your question. Obviously, we are already applying it in the decision-making process. And about this technical and better allocation of capital, this is a variable that we have already used for several semesters. So, our operating mode doesn't change at all. So, we don't have to adapt. We are already adapted.
Speaker Change: So, in general, for all portfolios, that's it.
Speaker Change: As Mario said, it's a new standard, the 4966 differs from the 2008-02 And naturally, this difference brings more provisioning The 4966 has more provisioning than the 2008-02 So, potentially, we will have an adjustment
Speaker Change: That's it. Thank you for the answer.
Speaker Change: The next participant is Mario Pierre, from Bank of America. Mario, you may proceed.
Mario Pierre: Good morning, everyone. Thank you for the opportunity to ask questions.
Mario Pierre: Mario, I'd like to understand a little bit, the macro scenario in Brazil in the last few months has worsened, right? We're seeing the future curve continue to rise, there's more uncertainty. I'd like to understand...
Mario Pierre: So, how is it that you are seeing two segments in particular, those of small and medium-sized companies?
Mario Pierre: and low-income people. I think you talked very little about low-income people. In the past, it was a topic that you discussed as a potential opportunity, and now I haven't heard much about low-income people. I would like to understand if this strategy changes. And in small and medium-sized companies,
Mario Pierre: How do you see the competition and your credit appetite for the segment? Thank you.
Speaker Change: Well, we talked less about massive or low-income by simply choosing the topics to address in each presentation, but, obviously, it's still a big focus.
Speaker Change: We are not reducing our low-income in a material way. What we are doing is a continuous work of de-risking in this portfolio, in all, but in this particular portfolio, Mario.
Speaker Change: And I would say that today we are separating the old years in which we do the de-risking and the newer years, the last two years mainly, I would say that we are with the base of low-income clients that we want to be.
Speaker Change: we continue, of course, in an expansion of the franchise, we continue to attract new customers with more and more data, more and more use of technology, so our aggregation of new customers is becoming more and more assertive and, without a doubt, our growth goes through the low income. Now, when I talk about being very critical of how is Holocapital, crossing with the question here a little while ago,
Speaker Change: The NSS, the NSS sign has a very low income there.
Speaker Change: If I realize that my marginal profitability of that consigned INSS to lower income is not adequate and my cross-sell capacity is not very large either because the available income limit of that client is low
Speaker Change: I'm going to do less of this in the near future. It's less because of the credit appetite, Mario, and more because of capital disciplines.
Speaker Change: So, I would say that our focus on massive or low-income income, and our focus on small and medium-sized companies...
Speaker Change: It will be calibrated by an overlay of credit upticks, which we haven't changed materially in these years. So, it's been two years and a few months since we implemented all the main adjustments we wanted to make in terms of credit upticks. And from then on, it was normal calibration of the edges, and keep testing and adjusting, which is normal bank management.
Speaker Change: But we didn't make any material adjustments.
Speaker Change: So we have an appetite on a level that is compatible with the last few years, that is, more for the conservative, I would say, than for the ambitious or aggressive.
Speaker Change: We don't intend to change this appetite.
Speaker Change: and the next derivative is where I make the most of the capital I have.
Speaker Change: I continue to grow in Massivos, I continue.
Speaker Change: less with products in which I make a little profit and generate a little croissant and more, within the credit appetite that I have, with products that bring me more transactional relationship and, therefore, more principality and, along with that, commissions, along with that, cheap funding, cheap deposit. So, in massive income, the big agenda is the duet card and check.
Speaker Change: It's worth it, in a way, for small and medium-sized companies.
Speaker Change: and more for medium-sized companies. We are seeing a significant increase in R&J this year, possibly the record year for R&J.
Speaker Change: and CELIC, which will increase the all-in cost of the PF. I hope I have covered your points.
Speaker Change: Obrigado.
Speaker Change: The next question is from Pedro Leduque, from Itaú BBA. Hi Pedro, good morning. Good morning everyone. Thank you for the question. Congratulations for the results too, Mario. Two quick ones. First, the services. I also asked in the last call, and I was expecting it to cool down, but it's still very strong, two digits a year.
Speaker Change: If you can elaborate a little more on that and what we can see for next year. And then, going back to the rationale of growing efficiently in capital, RWA's great allocation, it was very clear in the corporate.
Speaker Change: I would like to pass this on to Consumer Finance, which has a very strong 4% to 5% growth rate. If you are watching this, there are more opportunities to continue growing at this rate in the next few quarters. Thank you.
Speaker Change: I'm sorry. I'm sorry. I'm sorry. I'm sorry. I'm sorry.
Speaker Change: For some time, I would say a few years, I have been talking to you about our focus on diversifying the macro business portfolio.
Speaker Change: This is to create a credit differentiation, but also to build a much more powerful business in terms of commissions, relative to the RWA base that we always had.
Speaker Change: we, comparatively to some of our great peers
Speaker Change: Thank you.
Speaker Change: does a campaign for a trip and then passes it on. It has to be something really structural in the organization and there are many answers. So, I like it more than the growth itself, to see that it is quite diversified between several lines, always, of course, there are some that stand out more. This trip had a negative capital market, but obviously we have a powerful franchise, we had, perhaps, fewer capital market transactions in some cases, again, by capital discipline and not wanting to enter those that were too tight.
Speaker Change: So, for me, the point of commissions, Pedro, is to have several lines of commissions that go from one piano, we already have seven.
Speaker Change: and the accounts of some bi-annuals, cards and insurance, for example, have to increase. So, do we have a good growth of consortia in the TRI? Yes, we do. Annualized, two digits.
Speaker Change: I'm happy? No, I'm not. Because we have to think about a consortium business that in a few years is twice as big. And when I say twice, I mean twice the number of material results. So we have a consortium business.
Speaker Change: And if it doesn't reach, in a few years, and it can't be 10, a 2B business, not as a final level, but a next step, I, without a doubt, will not be satisfied. So you can charge me for the consortium, for example. So, basically, it's about taking these big lines of commissions and making them grow so that each one of them becomes more material. But the agenda behind this is a very disciplined focus of ours on measuring, and I say this explicitly, measuring FIIs by RWA as one of the big banks' KPIs. So we need to systematize this over the course of the year and, from now on, we will continue in an even more...
Speaker Change: focusing on this KPI and trying to converge with the best practices in the market and also outside of Brazil.
Speaker Change: about finance. I raise the ball, Gustavo complements, which is a business that is even under his management. We look at finance, although finance is the classic,
Speaker Change: It's a single product, let's put it that way. It's a separate company, it's Moraes Vehículos.
Speaker Change: and it is, in fact, played in a very integrated, but very independent way.
Speaker Change: We have an impeccable leadership there. But what we did well in the last few years was also to look at the financial side beyond, Pedro, what the business itself brings.
Gustavo Leeros: in thousands of dealers around Brazil. We originate between 80% and 90% of everything that the market sees of vehicle financing and choose to do 21% or 22% within our appetite. But Gustavo, comment a little more. No, that's exactly the angle, Pedro. We choose to do 21% or 22%. So, in the financial sector, we measure contract to contract. So, we make decisions by contract, we follow contract to contract all the performances.
Gustavo Leeros: with the best metrics, going back to the previous question, and using the provision metrics in both GAPs.
Gustavo Leeros: So, the performance is still good. On the margin, we can... we project... what we are projecting is confirming.
Gustavo Leeros: We will expand to the point that this performance is maintained. We would not like to reduce the performance in terms of profitability in the match and then the verified one.
Gustavo Leeros: We believe there is room, but we will grow according to the demand for this risk profile and the characteristics we are working on.
Gustavo Leeros: and we are operating where we feel comfortable and we are aiming for profitability, which is very interesting.
Gustavo Leeros: I would say that, to sum up, Pedro, the marginal profitability that we are having, not seeking to have, but that we are having in the financial sector, it is, on the margin, without any cross-section, already compatible with the big hot step that we want to reach in the bank as a whole. So, the financial sector is pulling us up, and not...
Gustavo Leeros: to the side or to the bottom, so just to leave this message that we have a contract-to-contract discipline that Gustavo mentioned and, in a way, it's the benchmark of what I want and am doing for all the bank's portfolios.
Speaker Change: Of course. Thank you.
Speaker Change: Thank you very much.
Speaker Change: We will now go to Tiago Batista from UBS. Good morning, Tiago.
Tiago Batista: Let's go. My question, Mario, you and Gustavo have already commented on the importance of the bank's profitability.
Tiago Batista: Ehh...
Speaker Change: Great question, Thiago. I'll start with the second part, he'll help me play the first one.
Speaker Change: given the cost of loading our Alco portfolio and especially the fact that, historically, we made all our APF production, which is pre-fixed, in a fanned base, without HEDGE. So that's how we ended up.
Speaker Change: currently, at least today, there is a price increase n e margin with market. And when it increases fast, as it happened between 2021 and 2022, we have already seen what has happened.
Speaker Change: On the margin, then, there is a delta load cost in the practice of the back book, as we call it, of the historical production and the ALCO portfolio.
Speaker Change: will be diminished over time with this result. I hope that, for the analysts, for the investors...
Speaker Change: to facilitate the reading, understanding and projection of what Santander is and where we are heading for the next few years. Bringing this to the question of profitability, I would have a detractor of my recovery of profitability because of SELIC, which I will try to neutralize as much as possible, which is the argument I just made. But what are the big levers? In a way, it's a wrap-up of what we talked about, either in the presentation or in the Q&A.
Speaker Change: to continue focusing in a very disciplined way on this simple index here of Φ over RWA that I mentioned here in Pedro's question.
Speaker Change: this floating, this transactional deposit, also the index of this deposit by RWA, which reinforces my argument that the credit has its importance.
Speaker Change: It has to be well-priced, it has to be worth it, but it is worth it even when I can bring, from the credit, more commissions and a cheaper passive to the bank, in a simplified way.
Speaker Change: So, the big levers are commissions...
Speaker Change: If we price better, and each 0.10 is worth a lot, and each 0.15 is worth even more, these three things added up, I would say capitalized, will make us reach a higher value. I'm talking about top line. Along with that, a super efficient spending management.
Speaker Change: We have done it and we will try to do even more. I think we are at a level where we can try to be even more efficient, given the franchise as it is, given the technology that we have already embarked on, given that we are embarking on technology in the next 1 or 2 years. So, we will try to be even more efficient from the point of view of expenses.
Speaker Change: and, obviously, the control of the credit provisioning with the best savings that we are doing. We are showing this, and we need to keep doing it. And with this, opening more and more powerful jaws between what I earn on top, with quality, and what I pay, in a way, as expenses, as provisions, and as others here. And this lever, quite powerful, will make us walk in the next few years to a level of profitability, as I said in that interview that you mentioned.
Speaker Change: Thank you for watching!
Speaker Change: Thank you.
Speaker Change: The next participant is Brian Flores, CityBank analyst.
Speaker Change: Hola, Brian.
Brian Flores: Hello Camila, Mario, Gustavo, thank you for the opportunity. Just a follow-up to this question, because I found it very interesting.
Brian Flores: It's great. I think that, at some point, maybe in the narrative, it seemed that a better structure in the ROI would come by hand, also with, perhaps, a risk retake in the segments, perhaps, PF, some lines a little more risky.
Brian Flores: with, as you said, those levers becoming maybe a little more relevant from now on whether it's pricing, commissions, etc. It's not efficient.
Speaker Change: No, Brian, great. Even though we are not formally giving guidance here, you know we don't give guidance in Brazil, the group does it for everyone, but yes, I think that you and all the analysts and investors here listening to us,
Speaker Change: could expect that, given this management, which I have called clinical, very disciplined, of how I allocate capital, which we are already at a capital base, a large enough, an expanded portfolio, as I said, of almost 700 billion, so we have a lot of raw material to work and to extract more commissions, deposits and better prices in pure and simple credit margin.
Speaker Change: Do we still want to grow the portfolio? Yes. But how am I going to grow the portfolio, and grow it well, two digits, etc. In some portfolios and others I will potentially decrease. I mentioned the NSS contract. It's almost a given that at least in the next trimesters I will decrease the NSS contract. And that's fine. In practice, I will potentially have a portfolio growth, at least in the next trimesters.
Speaker Change: with a clear client view, as a credit, as a means for me to capture this main and transactional relationship with the client. So where I can capture it, I will do it. And without an appetite expansion, Brian, super important your point, without an appetite expansion, since we are reading the same news and seeing, I mean, the market is not exactly easy, it has deteriorated. The economy is fine, but the market is anticipating a deterioration, be it inflation, be it interest rates, and consequently everything that comes along. So we are not throwing ourselves wide here to make a big statement, look, let's open, and with that we recover the Roth. I could even grow the Roth faster if I did that.
Speaker Change: but I don't believe in a more sprint-mode growth I prefer to grow more in a marathon-mode here and get there Not that it takes 40 years for us to do this, obviously it will take a long time but I prefer to grow consistently and recurrently and this takes a few more tris, but not much more than that
Speaker Change: Obrigado.
Speaker Change: Yeah
Speaker Change: Now we have a question from Eduardo Rosman, analyst of BTG Pactual. Good morning, Rosman.
Eduardo Rosman: Hi, good morning everyone. Congratulations on the result.
Eduardo Rosman: I'd like to make a follow-up on the subject of principality. I think Mario talked a lot about it, about this obsession, and said that credit is not the end. You talked a lot about commissions, funding, and also specifying credit well. But how can we, as an analyst, be able to follow which bank is doing a better job of principality? Because today everyone has talked about it and it's very difficult.
Eduardo Rosman: to follow us. What would you suggest for us to look at and, in the future, to ask you? Thank you.
Speaker Change: That was great, Rosa. I liked it.
Speaker Change: in how we are internally charging ourselves and, without a doubt, you should charge us in a reasonably convergent way so that we can speak in the same way.
Speaker Change: But when I talk about these indexes that I mentioned here, the commissions for RWA or cheap deposits or floating for RWA,
Speaker Change: There's a part of the funding that has to do with the attack, let's call it that, in which I'm consistently paying less and less for my CDBs, we did letter emissions.
Speaker Change: in the recent past, at historically very low levels as well. So there's this part that has less to do with the main thing, but the reduction of the cost of funding means that I bring floating, in a much more material way, to the clients that make transactions with me. Be it the big companies, which also generate money, leave money in the account, the small and medium-sized companies, and without a doubt the private sector, even the private sector, right? Every private client also leaves their balance in the account, but only with that client who is making transactions.
Speaker Change: Looking at commissions and floating, and floating together, how my funding mix is changing. My funding, my capture didn't change so much, tri vs. tri.
Speaker Change: But the quality has changed, so when you look at the within, with the little details of how it evolved, and we hope to be able to show this along the next three, you will see an increasingly better quality. So how do we measure if we are doing the agency of principality? By the evolution of the jaws between how much I grow capital, RWA, versus how much I grow the other lines.
Speaker Change: Obviously, it has to be at an adequate credit cost, so you have to measure how much my credit margin evolves versus how much my PDD evolves. You have to see how much my margin evolves as a whole, including commissions, versus how much my PDD evolves, because that's the cross-sell I do with the client.
Speaker Change: And, obviously, my indicators, which we will share more with you, of how my number of main customers is evolving, how this agenda... The way I measure, and each bank will measure, of course, in their own way, but we open for you, in detail, the methodology by which we measure. If it is of general interest, we even bring a publication, a Pocket version, but there is a science that we started a year ago, Rosman, to develop, of how we measure. We used to talk about linking, but linking is a product view. Ah, X products.
Speaker Change: This is not a client's view, so the main derivation is how the client sees his main relationship and we infer this with data, and I can comment more. So, either through the measurement of principalities, or through the jaws that we build in the result account.
Speaker Change: You will help us evaluate if we are having success or not, but on our side, we will be super disciplined in following each of these data, and some of them I will pin here for you today. Thank you for the question. I thank you. Thank you.
Speaker Change: We will now turn to English with Tito Labarta from Goldman Sachs. Good morning, Tito.
Tito Labarta: Thank you, Camila. Good morning, Mario, Gustavo. Thank you for the call and taking my question. I want to ask you about the net interest income growth, I guess, particularly maybe on the client NII.
Tito Labarta: because thinking, you know, to your prior response on improving profitability. If we look at client NII, it's growing around high single digits on a year-over-year basis. You know, the market NII, you know, benefited a little bit as rates came down, but maybe there's a bit of a headwind there.
Tito Labarta: with great going out.
Speaker Change: for staying higher for longer. So how do you think about your ability to potentially accelerate the growth in client and AI, particularly in maybe in a more challenging macro scenario and slightly more cautious tone that you have. Can you accelerate from here or how do you think about the client and AI growth in the current environment? Thank you.
Speaker Change: Sure, Tito. Thanks for the question. So focusing on client and AI, two variables, right? Volume and spread.
Speaker Change: So, on the volume side, I already mentioned, we are going to be focused on my marginal location of our other ways, focused on the marginal returns, on that credit and the capacity to cross sell overall, on my overall broader private relationship.
Speaker Change: So, that's already set, but I'm also going to focus on looking at the RWA density so that I can produce more portfolio with the same RWA. I didn't mention this before, so I'm going to be focused on all the angles.
Speaker Change: the marginal return, the cross-sellable return, and the RWA density. So that's on the volume side. But the most important part of the answer is really spread and pricing discipline.
Speaker Change: as we look into the fifth derivative of every portfolio we have. I mentioned the INSS portfolio, the payroll loan portfolio, but that's the same as we've done in many other portfolios. We've looked at the credit cards portfolio, which is...
Speaker Change: part of our, you know, growing agenda and we found out that some cuts of our even higher income credit cards
Speaker Change: they were more costly on the benefits I was giving to the client than the potential interchange and financing, which for this high-income clients is a very limited sum. So my clinical analysis that I mentioned before has to do with all my marginal production, even in credit cards where I want to grow, at the Financiera, the out-of-finance business, which Gustavo covered, and obviously on all other credit portfolios within individuals and SMEs.
Speaker Change: So, the answer has to be on a very strict pricing discipline, which we believe we're having more and more. There's more to do, by the way. I don't think we're at the, you know, optimum stage, but we are gradually and rapidly, actually, growing into that direction. The combination of a volume that will keep growing
Speaker Change: As in some businesses we have, but with a very strict pricing discipline, I believe we can continue to expand our clients and AI. I won't give you the percentage guidance type, but we should keep progressing on the credit side for sure. On the liability side, well, with rates going up on the client margin, we will make more money obviously on deposits by definition. When we look particularly at the credit side, the combination of better spreads, which we hope to continue on and on for the next quarters and hopefully years, and with some volume increase, the combination of those should be a positive job coming from client and AI as well, credit client and AI as well.
Speaker Change: particularly.
Speaker Change: Great. Perfect. Thank you, Mario. Thank you, Mario. Thanks.
Speaker Change: And with that, we conclude our session of questions and answers. I would like to thank everyone for being with us this morning. And after this video conference, I and the entire team of Relations with Investors of Santander Brasil are available to clarify any remaining questions.
Speaker Change: Muito obrigada, tenham um ótimo dia e até a próxima!
Speaker Change: Thank you all. See you.
Speaker Change: and the National Geographic Observatory in Los Angeles. NASA Jet Propulsion Laboratory, California Institute of Technology
Speaker Change: Congratulations, Mario Leal! Youhave just won $100,000,000
Speaker Change: Thank you for watching!