Q2 2025 Itaú Unibanco Holding SA Earnings Call

It's a pleasure to have you with us for our second quarter of 2025 earnings video conference.

As always Milton will soon walk you through our performance.

And afterwards, we will open the floor for a Q&A session.

Where analysts and investors will be able to interact with us directly.

But before handing over to Milton I'd like to share a few instructions to help you make the most of today's event.

For those accessing this video conference via our website. There are three audio options available on your screen the entire content in Portuguese the entire content in English or the original audio the first two options of a simultaneous translation.

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<unk> can also be submitted via whatsapp to the number displayed on your screen.

Today's presentation is also available for download on the hot side.

And as always on our Investor Relations website.

With that I'll now hand over to Milton and I'll see you again shortly Q&A session.

Milton over to you.

Yes.

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Yeah.

Uh huh.

Yes.

Sure.

Yeah.

Yes.

Yes.

Good morning, everyone. It's a pleasure to be here with you once again to discuss our second quarter 2025 results.

Today, I will present, an executive overview focused on our results and provide a brief update on our guidance.

I will also share with you an update on the <unk> initiative as I promised on our last quarter earnings video call.

I will comment on our migration agenda and on the bank's digital acceleration process.

Finally, I will share some key figures and wrap up with an invitation to all of you.

Let's move on to the numbers.

As you can see we are presenting the same key indicators as always.

Recurring managerial net income recurring managerial return on equity.

NII with clients NIM NPL over 90 days.

And common equity tier one ratio starting with our results. This quarter. We delivered net income of $11 5 billion Reais, representing a three 4% increase over the first quarter and a 14, 3% increase year over year. These are very strong results stemming from our solid performance base established over recent years.

As a result.

Our consolidated ROE reached 23, 3% expanding both quarter over quarter and year over year.

In Brazil, our ROE was 24, 4%.

A robust return also showing expansion over both comparative periods.

As always.

I would like to note that if we were operating with a capital ratio of 11, 5%, which is roughly in line with market practice and our boards approved risk appetite.

Our consolidated ROE, we would be 24, 7%.

And in Brazil, the most comparable figure would be an ROE of 26, 1%.

This is detailed in the slides footnote.

How did we achieve this result.

First it was a very strong quarter for NII with clients with a three 1% increase over the previous quarter.

And 15, 4% growth year over year.

I will provide more details on NII shortly.

NIM also expanded significantly.

Both sequentially and year over year.

Reaching nine 2% on a consolidated basis and 10% in Brazil.

We have not reached double digit NIM in Brazil since before the Covid pandemic in other words since 2019, underscoring a significant margin recovery for the bank's balance sheet over these years.

Delinquency rates remained well behaved consolidated NPL over 90 days stood at one 9% and reached 2.0% in Brazil. This indicator is stable quarter over quarter and is down year over year, indicating that despite some first quarter pressure in short term delinquencies.

We performed very well the second quarter and long term overdue loans.

A very positive development for the portfolio.

The common equity tier ratio posted another solid increase up 50 basis points quarter over quarter already adjusted for IOC provisions and some risk weighted asset effects, but that were immaterial. Thus, we see a 50 basis points expansion in common equity quarter over quarter.

And flat year over year.

This is excellent news for capital generation.

And it shows our ability to generate capital organically another very positive sign.

Moving onto the loan portfolio I want to highlight at the individual loan book grew 8.0% year over year and.

And 0.7% in the quarter with a notable one 6% quarterly increase in credit card loans more important than total credit card loan book growth is the finance credit card portfolio growth, which I will address specifically.

<unk> personal loans, it's crucial to break down this number because it includes products like unsecured credit lines and overdrafts as well as debt renegotiation products.

Breaking it down is key to understanding the quality of growth.

And how each credit line performed in the quarter.

I will provide more detail on this shortly.

Payroll loans underperformed this quarter due to multiple factors the payroll loans for ion is beneficiaries dynamic was impacted by both the cap on interest rates on funding costs as well as by a process change in originations.

Private payroll loans are advancing gradually due to ongoing product process improvement.

I am positive that there will be questions on this in the Q&A session.

In auto loans risk management is key and the portfolio continues to perform very well.

Both credit card and auto loan portfolios are outperforming market benchmarks for the national financial system.

Effective risk management discipline is essential here the mortgage loan book grew two 1% in the quarter and 17, 2% year over year further demonstrating our capacity to expand such an important credit line for our clients. The SME loan portfolio grew 0.8% in the quarter I will provide more details on the quarter growth and on the performance of what we.

Classify as small companies and the little while the large companies portfolio grew one 4% in the quarter and six 4% year over year. It is worth noting that the loan book in Brazil grew 1.0% while in Latin America. The portfolio declined two 3% a clear effect of the appreciation of the Brazilian real against other currencies the total Craig.

Portfolio grew 0.4% in the quarter and excluding the FX impact it would have grown one 3% for large companies to one 4% quarterly growth would have been two 3% excluding the FX impact. This breakdown provide an insight into the impact of FX fluctuations in previous quarters, we have noticed the impact of the Brazilian real depreciation. However, this quarter the Brazilian real appreciated versus other current.

Those are the main messages, let me provide further details on the loan book performance.

The finance credit card portfolio grew five 4% in the quarter.

And six 1% year over year.

It's worth highlighting that 100% of annual growth came from the unit class and personality segments.

There are several reasons for this.

Some of which I will detail later.

But primarily it's about new products and solutions and cards that have supported the expansion into finance credit card lines.

For personal loans breaking down the figures as critical as I've said.

Unsecured credit portfolio, including installments in overdrafts.

Posted a one 1% quarterly increase in 12, 1% yearly growth.

And as a percent of this growth comes from unit class and personality segments.

Mid and high income clients with great credit quality.

That composition in terms of an analogy would be the bad cholesterol, while unsecured credit would be the good cholesterol debt composition or the bad cholesterol posted a three 8% reduction in the quarter and a 12, 6% annual drop thus tracking this breakdown is essential to understanding the personal loan.

So dynamic.

Moving on to <unk>.

We see that small businesses grew five 4% in the quarter.

Government program volumes grew 21, 7% in the quarter.

With very sound credit quality.

Over recent months, we have become highly skilled in operating these programs.

Generating positive results and expanding net financial margin for the segment, a very positive outcome as well.

Now, let's talk about NII and NIM.

First focusing on NII than an annualized average margins.

And client NII, if we exclude the working capital effect.

Which was 4 billion Reais last quarter and $3 8 billion raised this quarter.

I would like to remind you that last quarter, there was a significant additional dividend distributions.

Which reduce the shareholders' equity and.

And explains the difference in working capital margin.

What's most important is that all core margin lines contributed positively.

The average volume contributed by 200 million Reais.

Product mix and segment mix added another 300 million Reais.

Spreads and liability margins are posting very strong results.

With our investment franchise delivering extraordinary results.

The calendar effect of one additional day also contributed positively and Latin America, and others added 100 million Reais in the quarter. This resulted in a core margin expanding four 5% in the quarter.

Or 1.1 billion Reais.

The very positive performance.

Moving on to NIM.

The first message is that NIM continues to expand sequentially.

Reaching nine 2% this quarter the highest in the historic series.

As we always say, it's important to analyze risk adjusted NIM since the hard figure may be misleading.

On a risk adjusted basis NIM reached six 3%.

A significant expansion in the quarter.

In Brazil, NIM hit double digits this quarter.

A level, we've not seen for many quarters.

Risk adjusted NIM was also the best in the series at six 9%.

Showing that we've managed to expand margins, while maintaining strong credit quality.

In summary, net financial margin this quarter posted the strongest and most solid expansion to date.

Moving onto markets NII.

Let me take a moment to focus on this slide.

We posted very strong results in the quarter exceeding our expectations.

It's always challenging to forecast trading results, which were outstanding this quarter and.

And contributed to a very solid overall outcome.

On the other hand, the cost for hedging the capital index, which is easier to forecast.

<unk> is expected to increase in the coming quarters, as we mentioned last quarter.

This is the impact of the interest rate gap.

The 2025 guidance for NII with the market is a range between one and 3 billion Reais. Thus 2 billion Reais is the midpoint of the guidance.

In the first half of the year NII with the market reached $1 8 billion Reais. It is still hard to forecast market NII performance, especially in trading, but we've seen very positive results. So far and we're reaffirming our guidance is the range fits our best estimates. If there are any updates we will discuss it again and I will provide more details when addressing the guidance framework.

Later on this presentation the cost for hedging the capital Index is expected to continue expanding over the coming quarters moving onto service fee income I would like to highlight a few lines.

Card issuance revenues are growing four 5% year over year with PPV performing well directly impacting interchange revenue.

In the asset management business I want to emphasize the growth in revenues from one seven to $1 9 billion Reais.

We had a very strong and solid performance fee.

Significantly better than last year, leading to a 17, 5% annual increase a sound result.

In advisory and brokerage services revenues declined both quarter over quarter and year over year, mainly explained by DCM activities.

Last year in the same quarter, we experienced the best DCM quarter in the bank's history.

Although we maintain significant market share in a strong position in the rankings due to lower activity and fewer transactions.

We naturally captured less revenue.

Another noteworthy line as the insurance pension and capitalization businesses.

Which grew eight 8% in the quarter.

And three.

<unk>, 3% year over year.

This shows that our operation has delivered very solid results more than doubled earnings over recent years.

And as keeping growth at a robust pace I will provide further details on this shortly in.

In the asset management business a positive highlight.

Is the net inflow of $47 5 billion Reais in the second quarter of 2025.

A 30% increase compared to the second quarter of 2024.

An outstanding result.

<unk> asset was the leading asset manager in terms of performance fees. This quarter, we are growing not only through distribution capacity, but also through value creation delivering sound performance to our clients and improving performance fees are very robust outcome.

Speaker #1: Of this growth comes from Uniqlas and Personalité segments. Mid and high-income clients with great credit quality, debt composition in terms of an analogy, would be the bad cholesterol, while unsecured credit would be the good cholesterol.

Moving next to insurance earned premiums are up 14, 6% year over year with significant expansion in the quarter.

Speaker #1: Debt composition, or the bad cholesterol, posted a 3.8% reduction in the quarter, and a 12.6% annual drop. Thus, tracking this breakdown is essential to understanding the personal loan portfolio dynamic.

Recurring insurance income grew seven 7% in the quarter and 25, 2% year over year.

Our core insurance Operation Bank assurance continues to expand at a very favorable pace.

Speaker #1: Moving on to SMEs. We see that small businesses grew 5.4% in the quarter, government program volumes grew 21.7% in the quarter, with very sound credit quality.

With growth concentrated mainly in personal accident and credit insurance.

Underscoring the recurring and solid nature of these results.

Moving onto credit quality I will first address short term delinquency followed by long term delinquency.

Speaker #1: Over recent months, we've become highly skilled in operating these programs, generating positive results, and expanding net financial margin for the segment. A very positive outcome as well.

Short term delinquency indicators are very positive showing delinquency is well controlled.

Overall, NPL 15 to 90 days posted a slide 10 basis points decrease and so did the indicator for the Brazilian operation in Latin America, we had only isolated cases impacting the quarter with very low volatility and no further concerns alongside we have the indicators, including corporate securities in compliance with resolution four nine.

Speaker #1: Now, let's talk about NII and NEEM. First, focusing on NII, then on annualized average margins. In client NII, we exclude the working capital effect.

Speaker #1: Which was 4 billion reais last quarter, and 3.8 billion reais this quarter. I would like to remind you that last quarter there was a significant additional dividend distribution.

Six six which we will continue to monitor closely the chart contains extensive information, but this is due to the limited historical data available under the new regulation I expect that within another quarter, we will be able to provide more comprehensive insights for monitoring.

Speaker #1: Which reduced the shareholders' equity and explains the difference in working capital margin. What's most important is that all core margin lines contributed positively. The average volume contributed by 200 million reais.

The direction remains consistent with the main change being in the information level, particularly in Brazil.

Speaker #1: Product mix and segment mix added other 300 million reais. Spreads and liability margins are posting very strong results. With our investment franchise delivering extraordinary results.

Where corporate securities are more relevant.

The short term delinquency ratio for individuals in Brazil dropped 10 basis points quarter over quarter.

And there is no corporate securities effect in this portfolio.

Speaker #1: The calendar effect of one additional day also contributed positively. And Latin America and others added 100 million reais in the quarter. This resulted in core margin expanding 4.5% in the quarter.

For Smes the credit quality remains healthy and NPL was flat in the quarter at one 4% considering the credit only portfolio and flat at one 2% when adding corporate securities to the credit portfolio. So the trend is the same but the absolute level changes I would like to remind you of some information I shared last quarter, a significant portion of the growth in the <unk>.

Speaker #1: Or 1.1 billion reais. A very positive performance. Moving on to NIM. The first message is that NIM continues to expand sequentially. Reaching 9.2% this quarter.

This portfolio came from government sponsored products.

Most of this portfolio is currently under a grace period, which benefits the denominator with the loan portfolio increase while the numerator is not impacted by the amount of overdue payments since under the Grace period, no installments are due yet resulting in a temporary indicator benefits. We expect this to normalize over the coming quarters in both short and long term overdue loans.

Speaker #1: The highest in the historic series. As we always say, it's important to analyze risk-adjusted NIM, since the hard figure may be misleading. On a risk-adjusted basis, NIM reached 6.3%.

Speaker #1: A significant expansion in quarter. In Brazil, NIM hit double digits this quarter. A level we've not seen for many quarters. Risk-adjusted NIM was also the best in series at 6.9%.

With no cause for concern.

Therefore, a slight uptick as expected for the SME portfolio.

Which shows remarkable credit quality and no credit risk concerns we have reaffirmed the cost of credit guidance. The main reason why we are highlighting the expectation of NPL growth is to be very transparent regarding our expectations going forward.

Speaker #1: Showing that we've managed to expand margins while maintaining strong credit quality. In summary, net financial margin this quarter posted the ongest and most solid expansion to date.

Analyzing long term credit quality the news is equally positive.

With very well controlled indicators.

Speaker #1: Moving on to market NII. Let me take a moment to focus on this slide. We posted very strong results in the quarter, exceeding our expectations.

We did not experience significant rollovers from the first to the second quarter, which is typically seasonal.

In Brazil, despite a slight increase in NPL creation loan portfolio growth resulted in stable indicators, which is very positive.

Speaker #1: It's always challenging to forecast trading results, which were outstanding this quarter. And contributed to a very solid overall outcome. On the other hand, the cost for hedging capital index was easier to forecast.

For Smes the earlier comment regarding gradual normalization over the coming quarters applies.

Short term overdue loans mature they will eventually impact long term delinquency ratio as grace periods expire.

Speaker #1: Is expected to increase in coming quarters, as we mentioned last quarter. This is the impact of the interest rate gap. The 2025 guidance for NII with the market is a range between 1 and 3 billion reais.

Another credit portfolio indicator that we are monitoring.

Is the loan book by stage and coverage by stage for both stages two and three.

Speaker #1: Thus, 2 billion reais is the midpoint of the guidance. In the first half of the year, NII with the market reached 1.8 billion reais.

In stage two there are no material concerns.

As movements largely reflect the mechanical rollover from short term overdue loans.

Speaker #1: It is still hard to forecast market NII performance, especially in trading. But we've seen very positive results so far, and we're reaffirming our guidance as the range fits our best estimates.

In line with expectations and without any significant issues in either loan portfolio or coverage.

Speaker #1: If are any updates, we will discuss it again, and I will provide more details when addressing the guidance framework later on this presentation. The cost for hedging the capital index is expected to continue expanding over the coming quarters.

Stage, two is expected to slightly decline this quarter.

This mechanical rollover impact at stage three or four individuals.

Speaker #1: Moving on to service fee income, I would like to highlight a few lines. Card issuance revenues are growing 4.5% year over year, with TPV performing well, directly impacting interchange revenue.

There is a dual effect the coverage ratio drops in stage three or four individuals since loans recently entered into stage three tend to be provisioned at a slightly lower rate compared to those.

Speaker #1: In the asset management business, I want to emphasize the growth in revenues from 1.7 to 1.9 billion reais. We had a very strong and solid performance fee.

Even though provision is made by expected lifetime loss.

As there were more entries and exits in this stage coverage mathematically drops.

Speaker #1: Significantly better than last year, leading to a 17.5% annual increase. A sound result. In advisory and brokerage services, revenues declined both quarter over quarter and year over year.

For the large companies the opposite trend was posted.

Coverage increased because we sold the credit portfolio.

In stage three at a lower than average provisioning ratio.

Speaker #1: Mainly explained by DCM activities. Last year, in the same quarter, we experienced the best DCM quarter in the bank's history. Although we maintain significant market share and a strong position in the rankings, due to lower activity and fewer transactions, we naturally captured less revenue.

Due to its strong collaterals.

This sale remove the loan with lower provisions from the portfolio.

Improving overall coverage as the remaining loans have higher average provisions due to their credit risk profile.

As a result, we have seen a significant reduction in restructured loan portfolios.

Speaker #1: Another noteworthy line is the insurance, pension, and capitalization businesses. Which grew 8.8% in the quarter, and 17.3% year over year. This shows our operation has delivered very solid results.

We continue to provide ample transparency regarding renegotiated and restructured portfolios. This is a relevant figure to monitor as it demonstrates our progress in ongoing evolution.

Speaker #1: More than doubled earnings over recent years. And is keeping growth at a robust pace. I will provide further details on this shortly. In the asset management business, a positive highlight is the net inflow of 47.5 billion reais, in the second quarter of 2025.

There was a $1 1 billion reais a reduction in the quarter driven by both restructured and renegotiated portfolios credit and securities renegotiated portfolio decreased from $40 1 billion Reais to $38 8 billion reais posting a healthy trend in both renegotiated and restructured categories.

Speaker #1: A 30% increase, compared to the second quarter of 2024. An outstanding result. Itau Asset was the leading asset manager in terms of performance fees this quarter.

Combined effect of all of these indicators is very well behaved cost of credits.

With only a slight nominal increase of the loan portfolio grows.

We should analyze the cost of credit growth compared with the loan book growth.

Speaker #1: We are growing not only through distribution capacity, but also through value creation. Delivering sound performance to our clients, and improving performance fees. A very robust outcome.

The annualized cost of credit over the loan portfolio remained flat at two 7%, which is a very healthy portfolio with an indicator far below historical average all in all we are growing the loan portfolio with high quality assets, resulting in a robust credit performance across all segments.

Speaker #1: Moving next to insurance, earned premiums are up 14.6% year over year, with significant expansion in the quarter. Recurring insurance income grew 7.7% in quarter and 25.2% year over year.

Highly positive outcome.

Regarding noninterest expenses.

Speaker #1: Our core insurance operation, bank assurance, continues to expand at a very favorable pace. With growth concentrated mainly in personal accident and credit insurance. Underscoring the recurring and solid nature of these results.

We posted an eight 7% increase in Brazil.

When comparing the first half of 2025 to the first half of 2024, and a nine 2% increase on a yearly basis.

Personnel and transactional expenses remained very well controlled lines the.

Speaker #1: Moving on to credit quality, I will first address short-term delinquency, followed by long-term delinquency. Short-term delinquency indicators are very positive, showing delinquency is well controlled.

The bank continues to deliver solid and growing results.

Which impacts many of these lines, whether through higher transaction volumes or an increase in variable compensation.

Speaker #1: Overall NPL 15 to 90 days posted a slight 10 basis points decrease, and so did the indicator for Brazilian operation. In Latin America, we had only isolated cases impacting the quarter.

In terms of technology expenses.

Speaker #1: With very low volatility, and no further concerns. Alongside, we have the indicator including corporate securities. In compliance with resolution 4966, which we will continue monitor closely.

We continue to invest heavily in business technology products and solutions to meet client needs.

And make the bank increasingly efficient and modern this has been the prevailing trend.

Speaker #1: The chart contains extensive information, but this is due to the limited historical data available under the new regulation. I expect that, within another quarter, we will be able to provide more comprehensive insights for monitoring.

And most importantly, all of this was delivered 100% within budget, meaning every initiative was fully aligned with our financial planning.

Speaker #1: The direction remains consistent, with the main change being in the information level, particularly in Brazil, where. Where corporate securities are more relevant. The short-term delinquency ratio for individuals in Brazil dropped 10 basis points quarter over quarter.

This underscores our ability to forecast and manage the banks cost structure with discipline and precision.

When we look at the half year comparisons we observe another positive evolution in our efficiency ratio, which declined to 36, 4% in Brazil in the first half of 2025 compared to 37.0% in the first half of 2024 on a consolidated basis. The ratio was 38, 5% in the first half of 2024.

Speaker #1: And there is no corporate securities effect in this portfolio. For SMEs, the credit quality remains healthy, and NPL was flat in quarter at 1.4%, considering the credit-only portfolio.

And now stands at 38, 4%. This represents another relevant improvement in artificial C levels, demonstrating that the tech capex continues to translate into efficiency gains and solid and sustainable results.

Speaker #1: And flat at 1.2%, when adding corporate securities to the credit portfolio. So, the trend is the same, but the absolute level changes. I would like to remind ou of some information I shared last quarter.

Speaker #1: A significant portion of the growth in the SMEs portfolio came from government-sponsored products. Most of this portfolio is currently under a grace period, which benefits the denominator with the loan portfolio increase.

Moving onto capital net income already adjusted for the full provision of interest on equity, which alone would imply a payout ratio of approximately 32%.

Speaker #1: While the numerator is not impacted by the amount overdue payments. Since under the grace period, no installments are due yet. Resulting in a temporary indicator benefit.

Generated a capital increase of 60 basis points in the quarter risk weighted assets had an immaterial impact during the period. So we expanded our CET one ratio to 13, 1% with 81 at one 5%, although our a T. One is structurally higher.

Speaker #1: We expect this to normalize over the coming quarters in both short and long-term overdue loans. With no cause for concern. Therefore, a slight uptick expected for the SMEs portfolio.

Basel regulations cap R. A T. One contribution of one 5%.

Speaker #1: Which shows remarkable credit quality and no credit risk concerns. We have reaffirmed the cost of credit guidance. The main reason why we are highlighting the expectation of NPL growth is to be very transparent regarding our expectations going forward.

We just announced a call option on two perpetual foreign currency debt instruments.

[laughter] totaling approximately $1 $5 billion in two tranches of U S dollars 750 million each.

Speaker #1: Analyzing long-term credit quality, the news is equally positive. With very well-controlled indicators. We did not experience significant rollovers from the first to the second quarter.

Alongside our second quarter 25 earnings release yesterday.

Due to this call option are 81 ratio should converge to approximately one 3%, which remains fully aligned with our capital appetite.

Speaker #1: Which is typically seasonal. In Brazil, despite a slight increase in NPL creation, loan portfolio growth resulted in stable indicators. Which is very positive. For SMEs, the earlier comment regarding gradual normalization over the coming quarters applies.

This was feasible because of our liability management, we issued approximately $5 billion.

At the local market, which enabled us to exercise the call option on these instruments and repurchase them again, the notice to the market on this was released yesterday.

Speaker #1: As short-term overdue loans mature, they will eventually impact long-term delinquency ratio as grace periods expire. Another credit portfolio indicator that we are monitoring. Is the loan book by stage and coverage by stage for both stages 2 and 3.

Moving onto our 2025 guidance.

We are reaffirming our expectation for credit portfolio growth NII with the market cost of credit fee income growth and noninterest expense growth. However, we are updating our expectations for NII with clients growth. Since we are posting stronger growth than originally expected. Accordingly. The range previously said was between seven 5% and 11, 5% and <unk>.

Speaker #1: In stage 2, there are no material concerns. As movements largely reflect the mechanical rollover from short-term overdue loans, in line with expectations and without any significant issues in either loan portfolio or coverage.

How has been updated to between 11% and 14% the lower end of the new guidance is nearly equivalent to the top end of the previous range. This is a very positive development for NII with clients on the other hand, given the higher earnings the benefit from interest on capital is diluted resulting in an increase in the bank's effective tax rates. In addition to that we've been posting a higher share of earnings coming.

Speaker #1: Stage 2 is expected to slightly decline this quarter. This mechanical rollover impacted stage 3 for individuals. There is a dual effect. The coverage ratio drops in stage 3 for individuals, since loans recently entered into stage 3 tend to be provisioned at a slightly lower rate compared to those exiting it via write-off.

From banking operations versus non financial entities together these effects led to a slight upward revision in our effective tax rates.

From the previous range between 27% and 29% to a new range between 28, 5% and 35%. These are the two updates we're making to the 2025 guidance this quarter.

Speaker #1: Even though provision is made by expected lifetime loss. As there were more entries than exits in this stage, coverage mathematically drops. For a large company, the opposite trend was posted.

Last quarter. Many of you asked me about the performance of one Ito and whether we had any data to share.

As I've mentioned before we are in the midst of a critical migration phase and our focus remains on executing this transition to carefully ensuring a smooth and client centric experience. We now have solid data to share.

Speaker #1: Coverage increased because we sold a credit portfolio. In stage 3, at a lower than average provisioning ratio, due to its strong collaterals. This sale removed the loan with lower provisions from the portfolio.

Not only from the one at our initiative, but also from our broader digital acceleration agenda, including product delivery solution development and clients' problems resolution.

Speaker #1: Improving overall coverage, as the remaining loans have higher average provisions, due to their credit risk profile. As a result, we have seen a significant reduction in restructured loan portfolios.

Over 10 million clients have already migrated to the <unk> platform.

With an NPS of 80 points.

And the conversion rate of 99, 3%.

Speaker #1: We continue to provide ample transparency regarding renegotiated and restructured portfolios. This is a relevant figure to monitor, as it demonstrates our progress and ongoing evolution.

Well above expectations.

Notably 54% of these clients already hold three or more products with the bank.

Speaker #1: There was a 1.1 billion reais reduction in the quarter, driven by both restructured and renegotiated portfolios. Credit and securities renegotiated portfolio decreased from 40.1 billion reais to 38.8 billion reais.

Reflecting our successful transition from a monoline offering.

Two a full bank proposition.

This shift has led to a 32% increase in engagement among the client base as they adopted the full bank offerings.

Speaker #1: Posting healthy trend in both renegotiated and restructured categories. The combined effect of all these indicators is very well-behaved cost of credit. With only a slight nominal increase as the loan portfolio grows.

These are very encouraging results.

Speaker #1: We should analyze the cost of credit growth compared with the loan book growth. The annualized cost of credit over the loan portfolio remained flat at 2.7%.

We are enhancing the user experience and the Super App and improving results.

Speaker #1: Which is a very healthy portfolio with an indicator far below historical average. All in all, we are growing the loan portfolio with high-quality assets, resulting in a robust credit performance across all segments.

Over the past 18 months, we have launched 19 key products and posted a 25% increase in Super App usage per client.

This has significantly boosted frequency.

Speaker #1: A highly positive outcome. Regarding non-interest expenses, we posted an 8.7% increase in Brazil, when comparing the first half of 2025 to the first half of 2024.

Activation and engagement across our digital channels.

For example, our recently launched digital savings feature called a free meal or Piggy bank reached a balance of 13 billion reais in less than 90 days with an NPS of 93 points.

Speaker #1: And a 9.2% increase on a yearly basis. Personnel and transactional expenses remain very well controlled lines. The bank continues to deliver solid and growing results.

It is important to highlight that most of these funds came from a deeper client relationship.

Our expense tracking tool launched less than 90 days ago.

Already has 1.8 million active users.

Speaker #1: Which impacts many of these lines. Whether through higher transaction volumes, or an increase in variable compensation. In s of technology expenses, we continue to invest heavily in business, technology, products, and solutions to meet client needs.

And an NPS of 85 points.

Interestingly, 57% of users.

We are unaware of their largest spending categories.

Highlighting our ability to address client pain points.

And promote financial education.

Speaker #1: And make the bank increasingly efficient and modern. This has been the prevailing trend. Most importantly, all of this was delivered 100% within budget.

This drives engagement strengthens relationships and increases long term client lifetime value.

We now have 15% of our unit class and personnel at the client base.

Speaker #1: Meaning every initiative was fully aligned with our financial planning. This underscores our ability to forecast and manage the bank's cost structure with discipline and precision.

Using peaks credits.

Which is a very positive development.

This functionality has contributed meaningfully to the growth in our finance credit portfolio.

Speaker #1: When we look the half-year comparisons, we observe another positive evolution in our efficiency ratio. Which declined to 36.4% in Brazil in the first half of 2025, compared to 37.0% in the first half of 2024.

Over 13 billion rising credit limits have been reallocated across cards.

Allowing clients to define their preferred limits and products.

Speaker #1: On a consolidated basis, the ratio was 38.5% in the first half of 2024, and now stands at 38.4%. This represents another relevant improvement in our efficiency levels, demonstrating that the tech capex continues to translate into efficiency gains, and solid and sustainable results.

This flexibility has led to over 20% transactional growth in the past three months.

Once again this demonstrates how well design digital offerings can radically improve product adoption.

Digital origination of loans, including personal loans and payroll loans grew 31% compared to the second quarter of 2024. This emphasizes digital origination is improving significantly origination of daily financing such as fixed credit overdraft limit paying bills and credit card installment plan grew 72% versus second quarter 2024.

Speaker #1: Moving on to capital, net income, already adjusted for the full provision of interest on equity, which alone would imply a payout ratio of approximately 32%.

Speaker #1: Generated a capital increase of 60 basis points in the quarter. Risk-weighted assets had an immaterial impact during the period, so we expanded our CET1 ratio to 13.1%, with AT1 at 1.5%.

These results reflect the impact of our investments in technology and modernization.

These are very positive results and we decided to share them with you.

Speaker #1: Although our AT1 is structurally higher, Basel regulations cap our AT1 contribution at 1.5%. We just announced the call option on two perpetual foreign currency debt instruments.

On the AI front, we've deployed over 500 internal use cases focused on efficiency and productivity.

We've launched picks via Whatsapp for our entire client base powered by AI and transactional capabilities.

Speaker #1: Totaling approximately 1.5 billion US dollars. In two tranches of US dollars 750 million each. Alongside our second quarter 25 earnings release yesterday. Due to this call option, our AT1 ratio should converge to approximately 1.3%.

Enabling self service through intelligent automation.

We are making significant progress in both investments and picks.

Transaction Ality is key to scaling our models.

Speaker #1: Which remains fully aligned with our capital appetite. This was feasible because of our liability management. We issued approximately 5 billion reais in perpetual debt in the local market, which enabled us to exercise the call option on these instruments, and repurchase them.

If you're a client to try it you will see the results yourself.

Regarding investment advisory we have launched a 24 seven AI powered investment specialist pilot already serving 10000 clients as results evolve we will expand this solution to a broader base. This is a fully scalable advisory model.

Speaker #1: Again, the notice to market on this was released yesterday. Moving on to our 2025 guidance. We are reaffirming our expectation for credit portfolio growth, NII with the market, cost of credit, fee income growth, and non-interest expense growth.

As I always say, having good AI technology is necessary.

But not sufficient.

What truly matters is combining technological knowhow with deep expertise.

Speaker #1: However, we are updating our expectations for NII with clients' rowth, since we are posting stronger growth than originally expected. Accordingly, the range previously set was between 7.5% and 11.5%, and now has been updated to between 11% and 14%.

And investment products and solutions.

Which has always been a core strength of the bank our investment front has always been robust.

Speaker #1: The lower end of the new guidance is nearly equivalent to the top end of the previous range. This is a very positive development for NII with clients.

Our understanding of client behavior economic cycles and solution design.

Is what powers, what we call Itaipu intelligence.

Speaker #1: On the other hand, given the higher earnings, the benefit from interest on capital is diluted, resulting in an increase in the bank's effective tax rate.

Technology alone without domain expertise does not deliver outstanding results and.

Speaker #1: In addition to that, we've been posting higher share of earnings coming from banking operations versus non-financial entities. Together, these effects lead to a slight upward revision, and our effective tax rate.

And I believe we've been able to do this in a differentiated way within the industry.

To wrap up.

I would like to invite you to it all day.

Speaker #1: From the previous range between 27% and 29%, to a new range between 28.5% and 30.5%. These the two updates we are making to the 2025 guidance this quarter.

Which will take place on September 2nd from nine am to 12 P M Brazilian time.

This is an event, we host where clients investors employees and competitors, where we share more about our journey and strategy.

Speaker #1: Last quarter, many of you asked me about the performance of One Itau and whether we had any data to share. As I've mentioned before, we are in the midst of a critical migration phase, and our focus remains on executing this transition carefully, ensuring a smooth and client-centric experience.

All members of the Executive Committee joined the event.

So theres, our invitation and I hope to see you soon.

We closed another quarter posting very solid results.

Speaker #1: We now have solid data to share. Not only from the One Itau initiative, but also from our broader digital acceleration agenda, including product delivery, solution development, and clients' problems resolution.

Strong across all lines.

With high quality.

And most importantly.

With a long term view across the balance sheet.

We truly believe.

Speaker #1: Over 10 million clients have already migrated to the One Itau platform. With an NPS of 80 points, and a conversion rate of 99.3%. Well above expectations.

And long term management.

We must continue to follow our mantra.

Capital allocation.

Portfolio management resilience.

And consistency.

That's what underpins the numbers you've seen so far.

Speaker #1: Notably, 54% of these clients already hold three or more products with the bank. Reflecting our successful transition from a monoline offering to a full bank proposition.

It's a highly entrepreneurial environment.

Where people are energized.

Results are growing.

And we're building remarkable things.

I am very excited about what we've been able to accomplish.

Without ignoring the challenges ahead.

Speaker #1: This shift has led to a 32% increase in engagement among this client base, as they adopted the full bank offering. These are very encouraging results, We are enhancing the user experience in the super app and improving results.

Let's talk more about this.

And now I will join Gustavo for our traditional Q&A session.

Thank you for your trust and for being here.

See you soon.

[music].

Speaker #1: Over the past 18 months, we have launched 19 key products and posted a 25% increase in super app usage per client. This has significantly boosted frequency, activation, and engagement across our digital channels.

Yeah.

Speaker #1: For example, our recently launched digital savings feature called Cofrinho, or Piggy Bank, reached a balance of 13 billion reais in less than 90 days, with an NPS of 93 points.

Paula Histology Volta God morning, we're back and directly from the studio for the Q&A session.

We start I would like to remind you that yesterday's a true language session. We will answer the questions Andrew languished.

Speaker #1: It's important to highlight that most of these funds came from a deeper client relationship. Our expense tracking tool, launched less than 90 days ago, already has 1.8 million active users, and an NPS of 85 points.

You asked the question in this unique support for the translation.

Our platform, we continue to give you the option to choose your original audio English Portuguese.

Submit your questions via Whatsapp under linked that it's on the screen. We have note in here and Gabriel G is here the CFO welcome to you both.

Speaker #1: Interestingly, 57% of users were unaware of their largest spending categories. Highlighting our ability to address client pain ints, and promote financial education. This drives engagement, strengthens relationships, and increases long-term client lifetime value.

And let's go to the first question that comes from Daniel vast trauma suffered a bank Danielle.

Good morning, everyone.

Congratulations on the results.

Excellent cash generation I think that a bank.

Bank is very well positioned for the day.

Okay.

Speaker #1: We now have 15% of our Uniqlas and Personalité client base, using Pix Credit. Which is a y positive development. This functionality has contributed meaningfully to the growth in our finance credit portfolio.

And for the Charlotte shareholders.

Is there is that capacity.

So the headlines, but anyway I wanted to discuss another change that network would be.

See the interests of our capital is growing.

Within a half percent.

Speaker #1: Over 13 billion reais in credit limits have been reallocated across cards. Allowing clients to define their preferred limits and products. This flexibility has led to over 20% transactional growth in the past three months.

We see the issuance number and the issuance of it a little closer to five.

Consistent in there as well.

So.

Can we finished very closely so we can see that the emphasis of the market that youre gaining market share over the last few months I wanted to understand that strategy.

Speaker #1: Once again, this demonstrates how well-designed digital offerings can radically improve product adoption. Digital origination of loans, including personal loans and payroll loans, grew 31% compared to second quarter 2024.

Where are you what is the direction how can you be more embedded Ed how can you.

GE banana directed offering for specific clients. So we can try and capture that strategy and once again congratulations on the result.

Speaker #1: This emphasizes digital origination is improving significantly. Origination of daily financing, such as Pix Credit, overdraft limit, paying bills, and credit card installment plan, grew 72% versus second quarter 2024.

Thank you Danielle it's a pleasure to have you here. Thank you for your.

The initial award well already net worth we have less.

Speaker #1: These results reflect the impact of our investments in technology and modernization. These are very positive results, and we decided to share them with you.

We have we haven't talked about the results in an isolated way because we integrated rare day network into the strategy of the bank.

It's a flow overview that <unk> of the market of credit cards in TPP of default the market of credit cards is 40% of the GDP of the floods. So for us it's much more important to see the full offer the vision of the clients.

Speaker #1: On the AI front, we've deployed over 500 internal use cases focused on efficiency and productivity. We've launched Pix via WhatsApp for our entire client base, powered by AI and transactional capabilities.

The overview that we have here evidently we see the other indicators as a result of Brady is distributed in showed our results as we publish.

Speaker #1: Enabling self-service through intelligent automation. We are making significant progress in both investments and Pix. Transactionality is key to scaling our models. If you're a lient, try it.

We block.

The PE the paid and the receivables and we have the result of flex and MTR, which is what you see here the rental but result of rather than the cost financial cost of risk is in the market for the client. So the result is always difficult to try and understand how the take rate the result.

Speaker #1: You will see the results yourself. Regarding investment advisory, we've launched a 24/7 AI-powered investment specialist pilot, already serving 10,000 clients. As results evolve, we will expand this solution to a broader base.

With this overview of the market share for us is not an objective.

Speaker #1: This is a fully scalable advisory model. As I always say, having good AI technology is necessary, but not sufficient. What truly matters is combining technological know-how with deep expertise, in investment products and solutions.

Always reinforce this issue of market share is a consequence of everything that we do and everything that we believe it because once we focus into correct client with correct.

Okay.

Activation of the relationship as a whole the consequence is the market share.

So we don't do a management, where we've seen a few cases, where you'll get anyway. As a result of the margin contribution margin that is negative but actually.

Speaker #1: Which has always been a core strength of the bank. Our investment front has always been robust. Our understanding of client avior, economic cycles, and solution design is what powers what we call Itau Intelligence.

Rental of their market share because of market share comes from big names, but it doesn't reflect into the result at the end of the day and sometimes you said you'd tractor of this result, so we had by consequence of everything that we've done.

Speaker #1: Technology alone without domain expertise does not deliver outstanding results. And I believe we've been able to do this in a differentiated way within the industry.

We are leaders, but we don't have to be the leader.

Not an issue for us the cost of the volume for market share to be concentrated on the big numbers. The big names, where the contributions are much lower the margins are very tight and sometimes we see contribution margins had a negative for the operation. So we continue with the strategy integration is a success we are happy with the results.

Speaker #1: To wrap up, I would like to invite you to Itau Day. Which will take place on September 2nd, from 9 AM to 12 PM.

Speaker #1: Brazilian time. This is an event we host for clients, investors, employees, and competitors. Where we share more about our journey and strategy, and all members of the executive committee join the event.

The way that the commercial teams are articulate on the acquiring business acquiring <unk> is nothing more than to reap additional receivables of the other ways that the client has to receipt. So this is the way that we manage today.

Speaker #1: So there's our itation. And I hope to see you soon. We close another quarter posting very solid results. Strong across all lines. With high quality, and most importantly, with a long-term view across the balance sheet.

And he brings a natural result, such as the flow creates value and we continue to be very focused in.

Our share of cash penetration share of payments, that's how we see the relationship with the clients.

Now, let's go to the second question I don't have a millennial tournaments.

Speaker #1: We truly believe in long-term management. We must continue to follow our mantra. Capital allocation, portfolio management, resilience, and consistency. That's what underpins the numbers you've en so far.

Good morning Red Iron.

And I think youll touch on zinc.

Do not hear you.

Okay.

Hi, sorry about that congratulations on the results once again.

Thank you for the opportunity to ask a question I wanted to talk about the portfolio.

Yeah.

Speaker #1: It's a highly entrepreneurial environment. Where people are energized, results are growing, and we're building remarkable things. I am very excited about what we've been le to accomplish.

Credit <unk> is growing it's very interesting it's growing beyond the total.

<unk> portfolio of credit cards.

And you are focusing more on the personality and Union class space and you are improving the profitability of portfolio without increasing your credit risk. So I wanted to understand.

Speaker #1: Without ignoring the challenges ahead. Let's talk more about this. And now I will join Gustavo for our traditional Q&A session. Thank you for your trust and being here.

Which are the initiatives of these new products that youre developing and deploying in those segments.

Thereafter is I want to understand if that's relevant contribution for your clients in this quarter and does that continue throughout the year.

Speaker #1: See you soon.

Thank you Renato. Thank you for the opportunity to have you here, we've seen a healthy evolution in this quarter, specifically with the margin with the client we have seen an important contribution.

It's a set of factors so margin of the credit card. The finance credit card is a component, but it's not a single one so that's why we want to open the personal credit card portfolio, that's you'll see that the rotation credit is doing well.

Speaker #2: Hola, estamos de volta agora.

Speaker #3: Good morning, we're back. And directly from the studio for the Q&A session. Before we start, I'd like to remind you that this is a two-language session.

There is a seasonality because when you see the expenses over the last quarters and the Rollouts from the first to the second one there is a propensity showed the higher financing. This isn't aspect. The second aspect is everything that we've discussed on the evolution of the journey of our clients. So when we can penetrate these segments such as any glass.

Speaker #3: We will answer the questions in the language that you asked question. And if you need support for the translation, through our platform, we continue to give you the option to choose the original audio, English, or Portuguese.

Pacifically in Pittsboro, 90 day and as broad as it shows how can we in a car.

Speaker #3: And you can submit your questions via WhatsApp on the link that is on the screen. We have Milton here, and Gabriel, he is here the CFO, welcome to you both.

Text of the journey on that transaction of the client gave lies your digital products that are very important.

Speaker #3: And let's go to the first question that comes from Daniel Vaz from Safra Bank. Daniel.

The client is facing a purchase sometimes is a short term transaction. They can get a disciplined because theyre going to be in <unk> and it's important for them to finance their purchase and competitive conditions and we have their rates. According to the profile of declines at segment, it's more of the profile than the segment.

Speaker #4: Good morning, everyone. Congratulations on the results.

Speaker #3: Excellent cash generation. I think that the bank is very well positioned for the distribution of dividends for the shareholders. And there is a capacity I saw the headlines, but anyway, I wanted to discuss another thing.

That we can personalize the offerings for the clients. So this is what we have seen the assays and the expansion of the P. I X credit within the credit card. We understand that this is bad chassis in the <unk>.

Speaker #3: The network, we see the interest over capital, growing. Seven and a half percent. We see the issuance number, and the issuance of Itau closer to 5.

Context, as a journey of the clients.

And so this is a set of initiatives.

It contributed just for the margin of the clients.

But when you see that breakdown for the clients berries average volume contributing their liabilities contributing Gwen we see exclusively the part of lead a part of mix of products distribution.

Speaker #3: Bradesco and Santander as well. So, very close. So we can see that the inference of the market is that you are gaining market share over the last few months.

Certainly there is an impact there is an impact as well Andy rotation.

Speaker #3: I anted to understand that strategy. Where is the direction? How can you be more competitive and how can you achieve a direct offering for specific clients so we can try and capture that strategy?

Is there an impact positive impact for the Max which is the growth in the.

Retail in regards to the middle wage we publish Andy <unk>. These are the three that contributed for an important margin with the client and I think that we have a maturity level that is good in this quarter and probably we're not going to see the same growth level for the next quarter.

Speaker #3: And once again, congratulations on the result.

Speaker #4: Thank you, Daniel, it's a pleasure to have you here. Thank you for your initial words.

Speaker #3: Well, really network we have less, we haven't talked about the results in an isolated way because we integrated really network into the strategy of the bank.

In that we've got to a maturity level that is very important this quarter, specifically, what the margin with the client. It's expanding your question we've seen an evolution, but there is a series of positive factors.

Speaker #3: It's a it's a flow overview. The PPV of the market of credit cards and PPV of the flow, the market of credit cards is 4% of the PPV of the flow.

The rotation of credit the growth of the finance credit card the growth of government wage has an expansion in the net margin. We had another business day, which is another impact we had in anticipation of results.

Speaker #3: So for us, it's much more important to see the full offer and the vision of the client, and this is the overview that we have here.

The operations of our wholesale debt are structured and we would imagine that Dave would materialize in the second quarter at name I'd anticipated. So there is a set of positive factors up ahead. This acceleration that we are observing in the quarter. It doesn't come with the same intensity, but regardless the guidance was seen again then we can.

Speaker #3: Evidently, we see the other indicators. So the result of really is distributed into the results as we publish. We blocked the pay the paid and the receivables and we have the result of flex and MDR, which is what you see here.

Speaker #3: The rental but resold of RAV and the cost, the financial cost of RAV is in the margin for the client. So the result is always difficult to try and understand how the take rate the result is with this overview.

Can.

Fulfill at the end of the year, a stronger result than originally planned.

Thank you.

Thank you let's go to the third question question <unk> Bank of America.

Speaker #3: The market share for us is not an objective. I always reinforce this issue. Market share is a consequence of everything that we do and everything that we believe in.

Good morning, everyone. Congratulations once again on the result, Milton what really impresses me.

As you are delivering the results.

Speaker #3: Because once we focus in the correct client with the rect price and the holistic vision of the relationship as a whole, the consequence is the market share.

Generating a lot of capital.

But the management is still not satisfied I mean, youre always trying to improve what caught my attention was the extraordinary expenses that you had in this quarter 600 million Reais approximately A&D restructuring. So did you explore more.

Speaker #3: So we don't do a management where we've seen a few cases where you get in with the result of the margin contribution margin that is negative, but actually that's rental of the market share because the market share comes from big names, but it doesn't reflect into the result at the end of the day.

Yes.

What are the measures what are you thinking I imagine that this is more for the reduction of the physical distribution of the bank, but would you be able to anticipate you us a target.

Speaker #3: And sometimes it's a detractor of this result. So we have by consequence of everything that we've done, we are leaders but we don't have to be the leaders.

Speaker #3: That's not an issue for us. The cost of the volume for market share to be concentrated on the big numbers, the big names, where the contributions are much lower, the margins are very tight, and sometimes we see contribution margins that e.

<unk> of efficiency. Thank you.

Maria Thank you. Thank you for the initial woods.

I think that this point that you bring to the beginning is our culture is a lot of the DNA of the organization.

This intensity of one nature do better every day.

Speaker #3: The strategy. Innovation is a success, we are happy with the results. The way that the commercial teams articulate on the acquiring business, acquirance is nothing more than the additional receivables of the other ways that the client has to receive.

That's about it.

We are never satisfied we celebrate good results, but the celebration in short term.

So the challenges are big Jesse Thanks, a lot.

And we are looking to the future to try and overcome our expectations.

Speaker #3: So this is the way that we managed the business and it brings a natural result. Such as the flow creates value. We continue to be very focused in our share of cash penetration share of payments.

That's helpful.

No Edgewater has a computer to put our foremost same firm wintel unprofitable. So they'll also danielle.

Following the Soviet who as a proposal of a specific or you can see Asia.

Speaker #3: That's how we see the relationship with the client.

First quarter hinshaw, the lack of a bunch of Biogen Fishman screwball quintiles in all of those wells.

Speaker #2: Now, 's go to the second question. Renato Meloni Autonomous. Good morning, Renato. We do not hear you. Hi, sorry. Congratulations on the results once again.

You saw them each leverage H, well my blah blah blah blah blah blah.

All of whom are blah blah blah blah blah vs. Later digit, though wonder I think but it seems like your photo of arena into Jiffy, Shane sure Blackhawk Schnorkel pitch Jabil break what are we seeing telegraph a ludicrous muscles contains no science total choice, but also digital lighting perish.

Speaker #2: Thank you for the opportunity to ask a question. Well, I wanted to talk about the portfolio of finance credit, which is growing. It's very interesting.

Ah competes cheerful he says I got buys just what I E.

Speaker #2: It's growing beyond the total portfolio of credit cards. And you're focusing more on the Personalité and Uniqlas base. And you're improving the profitability of the folio without increasing your credit risk.

We have to extract and operate in pockets of credits that way they're lower.

Efficiency index, you can absorb more risk than what we can absorb in a status quo.

So I believe that we've done a provision for restructuring of the <unk> in the past it's nonrecurring recurrent.

Speaker #2: So wanted to understand. Which are the initiatives of these new products that you are developing? And deploying in this segment? And thereafter, if I want to understand if that's a relevant contribution for your clients in this quarter, and does this continue throughout the year?

Born to make this point drive that's going through.

If we use C. In 2019, we're talking about 2025, if you do a provision with this characteristic these provisions are done when we look at a scenario.

Up ahead, and we see that we are in a period of <unk>.

Speaker #2: Thank you. Thank you, Renato, thank you for the opportunity to have you here. We've seen a healthy evolution in this quarter, specifically with the margin with the client.

Setting up the harvest of the investments that were done in the past, it's nonrecurring extraordinary certainly, but we will continue to evolve in our digital agenda.

Speaker #2: We've seen an important contribution. It's a set of factors, the margin of the credit card, the finance credit card is a component, but it's not a single one.

Eight of the information that I brought you the evolution of <unk>, which is a relevant embryo. So we can advance more and more where the super apps. The results are incredible all the evolution of the digital acceleration allows us to be more.

Speaker #2: So that's why we want to open the personal credit card portfolio to see that the rotation credit is doing well. There is seasonality because when you see the expenses over the last quarters, and the rollout from the first to the second one, there is a propensity to the higher financing.

<unk> in the plan and this is what we are discussing we're looking at efficiency. We you'll see that we are getting to an efficiency level that is very competitive.

We can see some volatility in the efficiency level in the quarters up ahead, because it's resulting naturally from.

Speaker #2: This is an aspect. The second aspect is everything that we've discussed on the evolution of the journey of our clients. So, when we can penetrate these segments, such as Uniqlas, specifically in Personalité and this product, it shows how we can, in the context of the journey and the transaction of the client, give rise to digital products that are very important.

Revenue and costs, but directionally, we have to have a.

Excellent.

So we need to be more competitive there are businesses that we are a global benchmark for efficiencies specifically in the wholesale operations and in retail we see an operation we saw an opportunity to evolve and the efficiency level well everybody has their homework to do it it's not a challenge of one segment or the other we have different proportions, we have evolved in that.

Speaker #2: The client is facing a purchase. Sometimes it's a short-term transaction. It can get a discount because they're going to pay in PIX, and it's important for them to finance that purchase in a competitive conditions, and we have the rates according to the profile of the client, the segment.

Agenda Gabriel he has been the leader of this effort and the organization. It's not an effort just to finance its an effort of the whole organization. It's not just a project of one area is the work of everyone and.

Speaker #2: It's more of the profile than the segment, in a way that we can personalize the offerings for the client. So this is what we've seen yes, there is an expansion of the PIX credit within the credit card.

No. We are in the phase of execution that is very strong we've been for many many years in a period of investment and that we are in a relevant phase of discussion and we've expected that we are going to advance <unk> restructuring over the next quarters in the next years.

Speaker #2: We understand that this is best chassis in the context of the journey of the client, and so this is a set of initiatives. It contributes for the margin of the clients.

Speaker #2: But when you see that breakdown for the clients, there is average volume contributing, there is liabilities contributing, when we see exclusively the part of the mix of products distribution, certainly there is an impact.

It will give you a guidance of footprint because the footprint is a consequence of what our clients are demanding it's natural that the flows are dropping.

And.

Speaker #2: There is an act as well in the rotation, and there is an impact positive impact for the mix, which is the growth in the retail in regards to the middle which we publish in the MPME.

Yeah.

We continue to adjust our footprint there is a reduction in the adjustment and we will adjust as necessary. So we can understand the sustainability of these models the value proposition in the model of service or the clients. This is why we focus and certainly we will work and will continue to work.

Speaker #2: These are the three that contribute to an important margin with the client, and I think that we have a maturity level that is good in this quarter. Probably, we're not going to see the same growth level for the next quarter, given that we've reached a maturity level that is very important.

And desperate vision is.

In implementation that is the clearest example of that to continue moving forward with our plans and the implementation of this project.

The module I. Thank you for the question Mario and now we will continue with Yuri Fernandes JP Morgan the floor is yours.

Speaker #2: This quarter, specifically with the margin of the client, it's expanding your question. We've seen an evolution, but there is a series of positive factors.

Good morning, everyone. Congratulations thank you Gustavo.

Speaker #2: The rotation of credit, the growth of the finance credit card, the growth of government, which has an expansion in the net margin, we had another business day, which is another impact.

And as a result that is very good on the capital.

I'm going to ask on physical which is another variable of efficiency, while the only line of the bank that is.

Speaker #2: We had an So there is a set you be able to anticipate to us a target or goal of efficiency? Thank you. Well, Mario, thank you.

Speaker #2: anticipation of results of operations of wholesale that are structured, and we would imagine that they would materialize in the second quarter, and they anticipated.

More of a weaker to figure it all but I understand the logic.

We have the revenue.

The.

Checking account has been dropped.

Is dropping so how much.

How much stabilization should we see in the checking accounts. This is a line that is weaker.

You had some nice data.

On the.

The construction is doing well the insurance is doing well so when they turn their spending improve in the improvement of efficiency and your plan. The stabilization in the lineup is sorry and in retail and wholesale on the opposite of what I thought I thought that it was the weaker areas.

More wholesale than retail so if you can comment a trajectory of this line it would be great. Thank you.

Thank you Judy thank effective words, and taking part of our call.

I believe that here, we need to break down the answer into a few chapters.

First one.

Transaction allergy, we see and the retail that transaction Leds, Joe very strong I just discussed.

The good collateral the bad cholesterol, we see transaction Ality up Gary any issuance and the acquiring in the engagement of our products in the digital channels. So we are increasing the volume in a consistent and important ways.

July is that I would say that they directly they fall through our time and that's why we we.

Speaker #2: Thank you for the initial words. I think that this point that you bring to the beginning is our culture, is a lot of the DNA of the organization.

We changed the way that we published when we have tariffs the checking account and we are talking about terrorism packages. We are re signifying the packages.

Speaker #2: And this intensity of wanting to do better every day. We are never satisfied. We celebrate good results, but the celebration is short-term. The challenges are big.

Doesn't intend to zero, because as you create value and if I could just again do that there is.

Charge it for a package, it's a different way to service our clients, but directionally, we highlight that first of relevant <unk>.

Speaker #2: And we are looking to the future to try and overcome our expectations. This is So I believe that we've done a provision for the structuring of the in the past.

This line in the quarter and secondly, I think.

We'll continue to drop letter by letter when we look at my head.

Signify the packages, but the delta is the millions of Ray is for all the completion of the revenue assurance is not that relevant percentages are higher because we're talking about small numbers. So what is the variation in revenue the percentages are higher so when we look at credit card. It's.

It is important to remember that here you have revenue of exchange and you have the revenue of.

The invoice.

And we see.

That this is less relevant.

Great.

And we see the strategy we have to be careful because every time that you had the growth of terrorists that answer irrelevant you are seeing decline and you'll have an adverse result in euro based because the good clients. They have access to good offerings will migrate if youll have a good transaction other where the bank and a good relationship.

Speaker #2: It's non-recurring recurrent. It's important to make this point, drive this point through. If we will see in 2019, we're talking about 2025, if you do a provision with this characteristic, these provisions are done when we look at a ario.

Okay.

That are willing to pay for something that is not necessarily a capacity to increase the cross sales and engagement for the banks. So this is.

We have to be careful when we look at the long term so.

Speaker #2: Up ahead, and we see that we are in a period of adjusting of the harvest of the investments that were done in the past.

Yearly.

Rates are dropping and we are.

Speaker #2: It's non-recurrent. It's extraordinary. Certainly, but we will continue to evolve in our digital agenda. In a bit of the information that I brought to you, the evolution of One Itau, which is a relevant embryo, so we can advance more and more with the super app.

We are working a loyalty program is still relevant because we see the credit card we need to see it in the context of the relationship when.

When we look at payments and restatement in receivables that you have the.

The companies who have the revenues you have <unk> you have payments, you'll have the revenue OPI extra or indeed.

Speaker #2: The results are incredible. All the evolution of the digital acceleration allows us to be more ambitious in the plan. And this is what we are discussing.

Company's University there is another logic of relationship answered the more where the flow and we've seen positive results. So when we look at the wholesale there are two separations the economic.

Speaker #2: We're looking at efficiency, we will see that we are getting to an efficiency level that is very competitive. We can see some volatility in the efficiency level.

The academic consultancy. The result is weighted because we had a second quarter that is weaker because we add a second quarter that is historically in the past with our debt. So we need to be very strong with that so there is less volumes in the market and this quarter. We've seen there is one operation that is more relevant.

Speaker #2: In the quarters up ahead, because it's resulting naturally from revenue and cost, but directionally we have to have a an index of efficiency. In businesses that we need to be more competitive.

Speaker #2: There are businesses that we are a global benchmark for efficiency, specifically in the wholesale operations and in retail. We see an operation; we see an opportunity to evolve in the efficiency level.

That has the characteristics that are our own and the general volume is dropping 20% so that affects naturally decline on the other hand, if you discuss the administration of our resources, but the source of its doing very well important growth year on year and the second aspect or the profiles that we're doing very well.

Speaker #2: Well, everybody has their homework to do. It's not a challenge of one segment or the other; we have different proportions. We have evolved in this agenda.

Speaker #2: Gabriel, he has been the leader of this effort in the organization. It's not an effort just of finance. It's an effort of the whole organization.

So we have a better profile in the market in the second quarter and the added value and our best expectation is that in the fourth quarter, we delivered good profiles, but once again it depends on the market.

Speaker #2: It's not just a project of one area. It's work of everyone. And every, now we are in the phase of execution that is very strong.

Speaker #2: We've been for many, many years. In the period of investment, and now we are in the relevant phase of discussion, and we've expected that we are going to advance in these restructurings over the next quarters and the next years.

All the expenses that Dave Springs, so when we loved to insurance and.

Social security, we have great results solid ones imported volumes that are growing the volume and we need to see the performance fee and which is very solid with the added value and insurance. The assurant assurance is growing very relevant year on year, 7%.

Speaker #2: We don't give you guidance on our footprint because the footprint is a consequence of what our clients are demanding. It's natural that the flows are dropping, and we will continue to adjust our footprint.

Seven and we see in the quarter on quarter.

Speaker #2: There is a reduction in the adjustment, and we will adjust as necessary. So we can understand the sustainability of these models. The ue proposition and the model of service.

So we see an expansion, but it has to be the way the activities.

As we see a smaller activity the data of the share of this business naturally weekend seal more of what happened in this quarter. The rest we think that we are performing very well in the lines and some potential look at the performance of the line, but also thinking about the lifetime value of the client version. So it's not just growing underlying if you had.

Speaker #2: For the client. This is what we focused and certainly we will work and we'll continue to work in this provision is an implementation that is the clearest example of that to continue moving forward with our plans and the implementation of this project.

I'm showing that we are growing into rates of the checking account and natural prices or the yearly rates of credit cards, we will not be satisfied. So we wouldnt be on understanding the change in that market and the other value to improve.

Speaker #2: Thank you for the question, Mario. Now we will continue Yuri Fernandez, JP Morgan. The floor is yours.

Speaker #5: Good morning, everyone. Congratulations! Thank you, Gustavo. Another very good result on the capital. I'm going to ask about physical, which is another variable of efficiency.

We have a position of the client and increase the engagement and the completeness of the relationship.

Regarding your possible been another Guzman does she spit balling Jia Bernardo.

Speaker #5: Well, the only line of the bank that is way weaker, the digital, logic. I think that the we have the revenue of the checking account, it has been dropped.

Once you wish Dov of mealtime, so congratulations <unk> Saba Nielsen <unk>.

Speaker #5: but I understand the And in retail and wholesale, well, on the opposite of what I thought, I thought it would be weaker. There is more wholesale than retail.

Gratulation is on the results. My question is the ROI per segment profitability.

The wholesale when over the retail for many many years. So how can you think about and decompose. These reversal in terms of segments that contributed the most.

Speaker #5: It's dropping. So how much? How much stabilization should we see in the checking account? This is a line that is weaker. You have some nice data on the... well, the consortium is doing well.

Or is this operation more of a spread efficiency or even the improvement in the risk profile.

Speaker #5: The insurance is doing well. So I wanted to understand the rovement of efficiency. In your plan, the stabilization in the line of Fiz. Sorry.

Does the bank see the profitability of this differential of Iowa, specifically, considering the competitive environment and credit environment that is more selective in the second quarter.

Think about it either.

Speaker #5: So if you can comment the trajectory of this line, it would be great. Thank you. Thank you, Yuri. Thank you for the words. And taking part of our call.

Thank you for your kind words.

A lot of <unk> I think that in the third quarter of 2022.

When we got to 16, 4% of profitability.

Speaker #5: I believe that here we need to break down the concern to a few chapters. The first one. Transactionality. We see in the retail that transactionality is still very strong.

The retail I said that we were not happy with that profitability, we were coming from a credit cycle that was tighter was more difficult, but we will do a catch up all throughout the next quarters. So there is a lot of work there is a lot of effort there is no silver bullet.

Speaker #5: I've discussed of the good collateral, the bad collateral. We see transactionality occurring in the issuance, in the acquiring, in the engagement of our products, in the digital channel.

Naturally credits and de risking that we've done in the portfolio throughout the period, all the portfolio management, focusing more and more resilient client in longer cycles. Other digital journey of the bank.

Speaker #5: So we are increasing the volume in a consistent and important way. There are two lines that I would say that they directly, they fall throughout time, and that's why we changed the way that we publish.

Speaker #5: So when we have tariffs, the checking account, we are talking about tariffs and packages. We are resignifying the packages. It doesn't tend to zero because, as you create value in the ackages, we can do that.

Delivery of value that we've shown the evolution of the digital acceleration of PID everything that we achieved.

So when we look at retail we look on the expansion of the net financial margin specifically, we have finance credit card that is evolving.

Speaker #5: There is a charge for a package. It's a different way to service a client, but directionally we highlight that first, the relevance of this line in the quarter, and secondly, I think that it will continue to drop little by little when we look ahead.

We have the rotation of credit evolving the funding in the next quarter.

Okay.

Preferably at a cost of credit and nominally draws.

Speaker #5: And we will resignify the packages by the deltas the millions of reais for all the completion of the revenue of insurance. It's that relevant.

When we look at retail we you can see that we expanded the financial margin with the client dropping the cost of credit in a nominal way. So the net financial margin is expanding this is the main driver of our vision is that we think that yes. There is a sustainability at this level of profitability.

Speaker #5: The percentages are higher because we're talking smaller numbers. So what is the variation in this revenue? The percentages are higher. So when we look at credit card, it's always important to remember that here you have revenue of exchange.

Some volatility is natural that it occurs.

We've had a quarter that we have the alignment of the start so to speak.

Speaker #5: And you have the revenue of the invoice. We see that this is less relevant. We also see the strategy, and we have to be careful because every time that you have the growth of tariffs that is relevant, you are seeing the client, and you have an adverse result in your base.

But within our profitability threshold that is very.

Comfortable D.

Retail is the companies is evolving.

And a great catch up that was done was it a natural persons that we know that we in fact changed on the threshold of the.

We create value for the organization the more volatile products, we don't do the management product oriented, but with profitability that are very high.

Speaker #5: Because the good clients that have access to good offerings will migrate. If you have a good transactionality with the bank and a od relationship, you end up bringing the client that are willing to pay for something that is not necessarily a capacity to increase the cross-sale and engagement for the bank.

Creating very a lot of value. So here is a set of values that.

When should the same point and if as a result.

Speaker #5: So this is we have to be careful when we look at the long term. So yearly rates are dropping, and we are working. Loyalty program is still relevant because we see the credit card.

We have an important driver for the profitability on the long term we are very focused on this end.

Wholesale we don't do the breakdown, but I am going to mention it because I think it's relevant what do we think about Brazil, and Latam, we see that in Brazil, we are changing the way the profitability center and us.

Speaker #5: We need to see it in the context of the relationship. Then, when we look at payments, repayment, and receivables, we have the companies.

The sum of WNS and it will be when we highlight in Latam. In addition, we have an ROI of 15 eight close to <unk>. So it creates a lot of value in that sense. So it's very interesting to see that even though the retail has done the suspension of the wholesale has delivered.

Speaker #5: You have the revenues; you have really, you have payments. You have the revenue of PIX within the companies' universe. There is another logic of relationship.

Speaker #5: It has to do more with the flow, and we've seen positive results. So, when we look at the wholesale sector, there are two separations. The economic consultancy results are weighted because we had a second quarter that is weaker, given that we had a second quarter that is historical.

Solid results about 30% in Brazil, and the other businesses that we are working.

Vantage of having a portfolio that advisors rather than <unk>.

We can naturally navigate through all on wholesale and retail performing with great profitability is that greater advantage of having a new universal bank.

Speaker #5: In the past with the debt, we need to be very strong with that. There are fewer volumes in the market, and this quarter we've seen one operation that is more relevant and has the characteristics that are our own. In general, the volume is dropping by 20%.

Deeper in all the businesses and has a market leadership and a great deal of the businesses that we work with.

But as Youre talking about thinking about that now we have Enrique Navarro Santander.

Zero.

Speaker #5: So that affects naturally this line. On the other hand, if you discuss the administration of resources, consortium is doing very well. Important growth year on year.

Hey, Bill good morning congratulations.

Relations on the results.

Question is about the portfolio of forthright answers you can we've seen.

Speaker #5: And the second aspect is that our profiles are performing very well. We have a better profile in the market. In the second quarter, the added value, and our best expectation is that in the fourth quarter we can deliver good profiles.

Some headwinds.

And this quarter the dollar might even though you Dodge some important growth and this portfolio. So my question is where what are the DNA of this growth with a capital markets. When does it come from is it more aggressive policies what can we expect for the next quarters.

Speaker #5: But once again, it depends on the market and all the expenses that this brings. So when we look to insurance and the social security, we have great results, solid ones.

Thank you and became great to see you again.

Here the effect of the exchange rate that Youll commented, it's very relevant they are portfolios has a lot of sensitivity to the foreign currency the growth.

Speaker #5: Important volumes that are growing, the volume, and we need to see the performance, see which is very solid with the added value. And insurance, the insurance is growing very relevant.

Here of wholesale has a boomer of operations that we.

Put into portfolio without changing the appetite is very important for the long term vision for the strong portfolio management on the long term and we have inside of <unk>.

Speaker #5: Year on year, 7%. 7.10, 7, and we see in the quarter on quarter. So we see an expansion, but it has to do with the activity.

Several segments of clients and companies, we've grown the portfolio by a per quality and all of them removing the foreign exchange effect of horse here, we have agri business, which has a performance that has already highlighted we are seeing the middle which has an effect of foreign exchange, but we when we see floating exchange rate grows even though.

Speaker #5: As we see a smaller activity, the data on the share of this business naturally allows us to reflect more on what happened in this quarter.

Speaker #5: The rest, we think that we are performing very well in the lines. It’s important to look at the performance of the line, but also to think about the lifetime value of the client vision.

Speaker #5: So it's not just growing in the line. If ou had a wage of showing that we are growing in the rates of the checking count and natural persons on the or the yearly rates of credit cards, we would not be satisfied.

The.

Companies grow the Smes grow there is no silver bullet in all the segments. We have penetration that is good and with the right price. We have a discipline of price that is very strong prices in the sense of capital allocation for the return of capital allocated capital. So we see the excesses in Nebraska des occurred.

Speaker #5: So we wouldn't be understanding the change in the market and the added value to improve the value proposition of the client and increase the engagement and the completeness of the relationship.

I'd, rather lose share then lose money in those profitability. So we've been very disciplined we don't see difficulties. We continue to grow this portfolio at the right price with the adequate profitability.

Speaker #5: So congratulations, Gabriel, Gustavo, Milton, congratulations on the results. Now, my question is the ROI per segment. The profitability of the wholesale went over the retail for many, many years.

Profitability level and with the completeness of the relationship that we have with our clients.

<unk> is very diversified no concentrations and no changes in your appetite. This is the most important thing and that's why we decided to be more aggressive in taking more risks no. It's the opposite we're more cautious when we look at the challenges that they had.

Speaker #5: So how can you think about and decompose these reversal in terms of segments that contributed the most? For this operation, more of a spread efficiency, or even the improvement in the risk profile?

The interest rates and the activities, we continue to be very careful.

Speaker #5: And how does the bank see the profitability of this differential of ROI, specifically considering the competitive environment and credit environment that is more selective in the second quarter?

As needed.

Thank you.

The next question Eduardo Rosman BTG.

Oh Powerpoints you first of all good morning, everyone.

So two questions that I believe that are interrelated.

Speaker #5: Thank you, Bernardo.

First about the credit business, we've seen that they generated value through this period ROI is above the cost of capital.

Speaker #4: Thank you for your kind words. I think that in third quarter of 2022, when we got to 16.4% of profitability, in the retail, I said that we were not happy with that profitability.

Historically, you've always indicated that the ROI has to be closer to the cost of capital and the excess of return should be coming from the other lines.

But the business of.

Wholesale of retail is changing.

Speaker #4: We were coming from a credit cycle that was tighter, was more difficult. But we would do a catch-up all throughout the next quarters. So here, there is a lot of work.

Hi.

High income so we would expand it we would expect that there is nobody really can go up and now that's not what happened and along with that question is where the future in the future with the improvement of efficiencies that you are indicating that are possible.

Speaker #4: There is a lot of effort. There is no silver bullet. Naturally, credit and the risking that we've done in the portfolio throughout the period, all the portfolio management focusing more and more in resilient clients in longer cycles, all the digital journey of the bank.

Risk appetite will increase.

We see more opportunities of growth in it or even in the future. We can reduce the payout. So we can reinvest more and.

Grow better with higher Rois.

Speaker #4: The delivery of value that we've shown the evolution of the digital acceleration of PAD, everything that we have achieved. So when we look at retail, we look at an ansion of the net financial margin, specifically we have finance credit card that is evolving.

Thank you rosman, it's a pleasure to see you again.

That's just.

Well in fact, it was a good quarter.

Order for a credit because of the reasons that I just commented the <unk>.

And that the margin there was very good the cost of credit very well behaved A&D.

Speaker #4: We have the rotation of credit evolving the funding. In the next quarter, we see more pressure with the cap products, the cost of credit in nominally drops.

As the retail we've seen the cost of credit that it <unk>.

<unk> newly dropping so this is a very relevant point.

We've seen a few doubts about the formation on the border. It's important to remember that we work with the expected loss in the bank. So the main effect for the provisions.

Speaker #4: So when we look at retail, you see that we expanded the financial margin with the lient, dropping the cost of credit in a nominal way.

Speaker #4: So the net financial margin is expanding. This is the main driver. Our vision is that we think that, yes, there is a sustainability at this level of profitability.

Is there short term delay for the last quarter when it goes through the long term.

The provisions have been already done so that's why the coverage level is.

Speaker #4: There is some volatility, it's natural that it occurs. We've had a quarter that we have the alignment of the start, so to speak. But within a profitability threshold that is very comfortable, the retail of the companies has evolving.

Not on the delay.

And we had our provisioning and the formation of 120% and Andy It's even below 100 in retail.

98, so the expected loss in the short term delays. So that's why I say opening for the.

Speaker #4: And a great catch-up that was done was in the natural persons that we in fact changed the threshold of the, we create a value for the organization.

Short term delay delinquency, because it's what's expecting what directing the expected loss of the balance sheet anything differently.

From that you're operating in incurred losses in unexpected losses. So I just wanted to clarify that and even though we see the formation align with the portfolio that we observed and within the volatility that is expected and seen that seasonality in this quarter first quarter from the first year. The second is the rollout of the short term to the long term debate.

Speaker #4: The more volatile products we don't do; the management is product-oriented, but with profitabilities that are very high, creating a lot of value. So here is a set of values that went to the same point, and this is the result.

Speaker #4: We have an important driver for the profitability on the long term. We are very focused on this. And in the whole, so we don't do the breakdown, but I'm going mention it because I think it's relevant.

Danny normalize. It later, so I wanted to clarify with your question this aspect.

This quarter was very solid and net financial margin to credit is performing very well.

Speaker #4: When we think about Brazil and Latam, we see that in Brazil we are changing with a profitability center in this it's the sum of WMS.

In fact, the cost of capital if youll see its closer to 15 or so.

Speaker #4: And it's OBBA. When we highlight Latam in this vision, we have an ROI of 15.8. Close to 16. So it creates a lot of value, in that sense.

Since we are looking at an average.

And cost of capital.

Child here, if we operated with 15 and the average in the whole quarter, we would be slightly below the cost of capital. So here you are always running against the cost of capital. So it depends on the interest rate cycle and but its only depends on the cost.

Speaker #4: It's very interesting to see that even though retail has undergone significant expansion, wholesale has delivered solid results, about 30% in Brazil and across all the businesses we are involved with.

Cost of equity.

The bank on the long term and that's what's going to determine with all the agenda of efficiencies and we still believe that working closer to the cost of capital is the ideal. So we can achieve naturally.

Speaker #4: So the advantage of having a portfolio that is diverse, relevant, and that we can naturally navigate through all on wholesale and retail performing with great profitabilities is the great advantage of having a universal bank that is deep in all the businesses and has a market leadership in a great deal of the businesses that work with.

Penetrated with our relationship with our clients and of course a very.

He's from segment to segment, but accurate with what we've reduced of credit over the last year that has been.

Very good quality positive toward the value creation. So the positive trend for the creation of credit is well above the efficiency level that you discussed.

Speaker #3: Thank you, o. Now we have Enrique Navarro, Santander Brazil. Good morning. Congratulations on the results. My question is about the portfolio corporate. We've seen some headwinds.

Certainly when we adjust the efficiency level index.

It's going to open floor space, where credit operations that do not have the necessary profitability. So we can in fact get into a different public Saturday, we don't get in.

Speaker #3: The IOF in this quarter, the dollar, and even though you got some important growth in this portfolio. So my estion is, what is the DNA of this growth?

That reason because of the limitation of the efficiency level. So this is the direction that we're headed our objective is not a big payout. Our objective is to reinvest the capital of the bank in adequate profitability and distributed access.

Speaker #3: Is it capital markets? Where does it come from? Is it more aggressive policies? What can we expect for the next quarters? Thank you, Enrique.

Speaker #3: Great to see you in. Here, the effect of the exchange rate that ou commented is very relevant. The portfolio has a lot of sensitivity to the foreign currency.

We showed in years.

So with all of the migration of one eight hour now the adventure that we're doing and the natural question, specifically and all of the expectation of the expectation of the efficiency level. This will allow us to get into pockets that we explored a very little thin clients that we sub service or we cannot service at all in an integrated way.

Speaker #3: The growth here of wholesale has a boom of operations that we put in the portfolio. Without changing the appetite, this is very important for the long-term vision for the strong portfolio management on the long term.

Speaker #3: And we have inside of the OBBA, several segments of clients, and companies. We've grown the portfolio per quality and all of them removing the foreign exchange effect.

So this is a great opportunity for growth one Ito is bringing bad we are advancing in the efficiency level, certainly and we're going to have space to grow in their portfolios.

Speaker #3: Of course, here we have agri-business, which has a performance that is very highlighted. We've seen the middle which has an effect of a foreign exchange, when we see S foreign exchange grows, even though the companies grow, the SMEs grow, there's no silver bullet.

Let's not forget about Brasov headquarter coincide with my next question with Jakob <unk> UBS.

Morning, Joe.

Good morning, with tableau with morning Milton.

I'm going to do a follow up on the question of Roswell and Mario on efficiency.

Speaker #3: All the segments we have penetration that is good, and with the right price. We have a discipline of price that is very strong. Prices in the sense of capital allocation for the return of capital allocated capital.

Are you comfortable that two day year add not one at all by the.

Retail.

<unk> is state of the art to the point that the.

Speaker #3: So we see the accesses in the market. They occur. But we rather lose share than lose money, and lose profitability. So we've been very disciplined.

The branches are secondary choose the relationship with the client.

So it's a question.

Speaker #3: We don't see difficulties. We continue to grow this portfolio. The right price with the adequate profitability level, and with the completeness of the relationship that we have with the client.

About asset quality.

You are very comfortable with the evolution of the quality of the portfolio in the second quarter perpetual agile next year do you think that Thats a specific factor that is just your thought you could focus and more.

Speaker #3: So the growth is very diversified. No big concentrations. And no changes in the appetite. This is the most important thing. And that's why we've decided to be more aggressive and taking more risk.

And better clients.

Before the market as a whole what do you think that this is the same.

Speaker #3: No, it's the opposite. We're more cautious when we look at the challenges of ahead. The interest rates and the activities. We continue to be very careful.

For the portfolios or the asset quality is not a niche.

Yes.

Thank you traveled great to see you again.

Speaker #3: As needed. Thank you. Next question. Eduardo Rosman, BTG. Good morning, everyone. Two questions that I believe that are interrelated. First, about the credit business.

Thats helpful.

I'm going to start by the second one and I'm going to answer both.

But here about the cost of credit.

That has to do with the.

Clear strategy of the bank of doing a portfolio management with a long term vision and the wholesale and retail so we see very little hiccups and volatility in the numbers and when you see the management for the long term cycle you can have a better control of the quality of credits you defined the publics you can cluster.

Speaker #3: We've seen that they generated values through this period. ROI is above the cost of capital and if I'm not wrong, historically, you've always indicated that the ROI had to be closer to the cost of capital and the access of returns should be coming from the other lines.

Speaker #3: But the business of wholesale of retail is changing. In the high income. So we would expect that this number would go up, and now what happened?

Or is the base you can define the frontiers of the appetite by our clusters and in that sense, you are going to navigate.

In a less volatile way and in a more consistent way the worst thing that can happen with a credit relationship as a stop and go that you offer and then you'll have just stopped abruptly the predictability of the client and the bank and the results I'm going to give you two indicators of the market and are not doing any.

Speaker #3: And along with this question, if with the future, in the future with the improvement of efficiencies that you are indicating that are possible, you're risk appetite would increase.

Speaker #3: Would we see more opportunities of growth in Italy? Even in the future, we can reduce the payout. So we can reinvest more and grow better with higher ROIs.

Shorter qualification.

What we're seeing but I believe that the performance has two indicators that I follow of delays, which is the system publishing the credit card and vehicles.

Speaker #3: Well, thank you, Rosman. It's a pleasure to see you again. It's a nice to. Well, in fact, it was a good quarter for credit because of the reason that I just commented.

<unk> seen in the last quarter, the long term delays on the credit card growing 100 points in this quarter.

Speaker #3: The expansion of the margin, it was very good. The of credit very well behaved in the retail. We've seen the cost of credit that is nominally dropping.

So there can always be a discussion that the change of criteria of write off hours grew 20, so when we compare with the performance of the market and we haven't seen any change of criteria and the write off we've seen the performance of the industry that is different from what we observed and.

Speaker #3: So this is a y relevant point. We've seen a few doubts about the formation on the quarter. It's important to remember that we work with the expected loss in the bank.

Speaker #3: So the main effect for the provisions is the short-term delay for the last quarter. When it goes to the long-term, delays, the provisions have been already done.

Ballpark, 20% when you exclude it from December Youll see that the impact is more relevant than that bill.

For vehicles with no different we see that well vehicles can be a change of write offs.

Speaker #3: So that's why the coverage level is not under delay. And we had a provisioning on the formation of 120%, and in the it's even below 100 in the retail it's 98.

Policies or write up no. The short term delay of vehicles is coming stronger than what we observed short term delay doesn't have any relationship with the policies of write off. So we continue to be very consistent we have gained shares with the clients that we published targets for the organization. We've penetrated in an important way we have grown two digits in this public.

Speaker #3: So the expected loss and the short-term delays, that's why I say opening for the short-term delay delinquency because it's what's expecting. It's what directing the expected loss of the balance sheet.

This is a management strategy I believe that every bank has their own strategies around policies our own criteria ours is just and it has been very consistent specifically when you allocate capital in an incorrect way with Z.

Speaker #3: Anything differently from that, your operating and incurred losses are not expected losses. So I wanted to clarify that and even though we see the formation aligned with the portfolio that observed and within the volatility that is expected and seeing the seasonality in this quarter versus quarter from the first to the second, the rollout of the short-term to the long-term delay, then it normalizes later.

Transaction, then youll see profitability, where the capital allocation. So this has been an important driver.

Hey, Paul.

The first point I wanted to highlight I think that all the investments that we've done with our Super App, the digital journeys, where the completeness taking off <unk>, we don't want to.

Speaker #3: So I wanted clarify with your question this aspect. This quarter was very solid in net financial margin. The credit is performing very well. In fact, the cost of capital, if you see it's closer to 15.

The clients go to the branch because they wanted to go so.

All of the digital.

Speaker #3: So since we are looking at an average ROI and cost of al, it creates value. If operated with 15 and the average in the whole quarter, we would be slightly below in cost of capital.

Transformation was.

When necessary if they wanted to stay on the Super App or if they want to go into the branch and talk to the manager on onsite or or remote.

Speaker #3: So here you're ways running against the cost of capital. So it depends on the interest rates in Brazil. It depends on the COI. The cost of equity of the bank on the long-term and that's what's going to determine with all the agenda of efficiencies.

Agent or a consultant of real estate or insurance.

It's a decision of the client we cannot obliged to clients, who use one channel or the other because of a lack of offerings. So we try to offer all we are very satisfied with the evolution of the Super App and we are looking at the NPS absolute.

Speaker #3: I still believe that working close to a cost of capital is the deal. So we can achieve naturally penetrate with the relationship with our clients.

It is.

Speaker #3: And of course, it varies from segment to segment, but it's had to do with what we produced of credit over the last years that has been very good quality positive for the value creation.

Tell me.

Its drastically.

We've reduced the digital the had a higher NPS. So we are in the same arena competitive arena for the cost of quality and with opportunities to continue to evolve.

Speaker #3: So the positive trend for the creation of credit as well. About the efficiency level that you discussed, I certainly when we adjust the efficiency level, index it's going to open for space for credit operations that do not have the necessary profitability.

Some of them.

To launch new products, we launched 19 new products.

And we showed the results of some.

And this is a new normal of the bank it's not.

Projects, its not and we did.

Speaker #3: So we can in fact get into different public sector that we don't get in because of that reason, because of the limitation of the efficiency level.

<unk> delivered a product.

And its engagement and activation.

It's better penetration in the relationship.

Speaker #3: So this is the direction that we're headed. Our objective is not a big payout. Our objective is to reinvest the capital of the bank in adequate profitability and distribute the excess so that we shouldn't use.

This is a new normal of the bank, we're going to have a new bank digital bank for the client.

We have 70 million clients and within this publicly you have different profiles.

Speaker #3: So with all the migration of one Itau and all the vances that we're doing in the natural person specifically, and all the expectation of the expectation of the efficiency level, this will allow us to get into pockets that we explore very little, and clients that we sub-service or we cannot service at all in an integrated way.

We have those that prefer the physical branch there are the specific public step towards specific public favorite demand remote service. So this is the advantage we can service decline and all.

All the context and I am certain that the Super App that we've done.

Be a facilitator.

The evolution of the efficiency level of the retail segment.

Speaker #3: So this is a great opportunity for growth. One Itau is bringing that. We are advancing in the efficiency level certainly, and we're going to have space to grow in this portfolio.

No we have our shred it.

The first <unk> from Citibank.

Hi, Gustavo Thank you thank.

Thank you Robert.

So congratulations.

Speaker #3: Next question with Tiago Batista, UBS. Good morning, Tiago. Good morning, Gustavo. Good morning, Milton, Gabriel. I'm going to do a follow-up on the question of Rosman and Mario on efficiency.

Okay.

Just could you such a cute I guess, we'll just start there.

Asia.

We've discussed the strategy of the bank.

And.

How about the private considering other.

So we the payroll loans are private payroll loans.

Speaker #3: Are you comfortable that today you're at not one Itau, but the retail app is state-of-the-art to the point that the branches or secondary to the relationship with the client?

I Wonder you truly evaluate.

How you see the evolution of the product.

And how <unk>.

Once two position in the consumer automotive other private pay payroll loans.

Speaker #3: So it's a question about asset quality. And you ow you're very comfortable with the evolution of the quality of the portfolio in the second quarter, potentially until next year.

Well, thank you for the words and the participation in our call well I believe that this is a product and evolutions.

Speaker #3: Do you think that that's a specific factor that is just yours that you could focus in more in better clients? Or for the market as a whole, would you think that this is the same for the portfolios or the asset quality is not a niche thinking the second semester?

And we've seen this is a great idea. It makes a lot of sense, we see the portfolio as a whole as a product that is growing in the market.

Our trend, but we are growing in a 40 billion reais, but it's limited to a specific a soc.

Associations, we always had 30% of that market.

Speaker #3: Thank ou, Tiago. Great to e you in. I want to start by the second one, and I'm going to wer both. But here about the cost of credit.

It's a market that we have a relevant participation, but it's a small market.

It's a market that is growing so we see an evolution of portfolios I'll throw out the last months at the beginning there was more activity than because of operational issues risk aspects, we've seen a deceleration.

Speaker #3: That has to do with the clear strategy of the bank of doing a folio management with a long-term vision in the wholesale and retail.

Yourself.

Industrial registry, when we talk about platform and organization that capacity technological capacity I believe that we are the first bank along with Banco do Brazil, specifically mentioning another one to get into this product of the big banks in this product because of <unk>.

Speaker #3: So we see very little hiccups and volatility in the numbers, and when you see the management for the long-term cycle, you can have a better control for the quality of credit.

Speaker #3: You define the publics, you can clusterize the base, you can define the frontiers of the appetite per clusters, and in that sense, you're going to navigate in a less volatile way.

Sensitive reasons.

The capacity to adapt to the changes that were done that's why we are here we are.

Speaker #3: And in a more consistent way. The worst thing that can happen with the credit relationship is to stop and go that ou offer, and then you have to stop, abruptly.

From the inception, and the advantage of taking part since the beginning is that we learn from this evolution of Plaid for not only the operational challenges, but we could define very well the strategy. Our strategy is very robust we focused on.

Speaker #3: The predictability of the client and the bank and the results. I'm ing to give you two indicators of the market, and I'm not doing any sort of qualification of what we are seeing.

On the clear matrix of publics and that we want your service in which way.

Speaker #3: But I believe that the performance has two indicators that I follow. Of delays, which is the system publishing. The credit card and vehicles. We've seen in the last quarter the long-term delays on the credit card growing 100 points.

We're going to grow and we have the car we've grown with <unk> weeks that we had 30% of the share of production I think that in the accumulated if I had to give you a number it would be 11, 12% of market share of production.

Speaker #3: In this quarter. So there can always be a discussion that the change of criteria right off hours grew 20. So when we compare with the performance of the market, and we haven't seen any change of criteria in the write-off, we've seen a performance of the industry that is different from what we observed.

Once again, focusing where we didn't look at the target products public.

Publix is higher market share there is a lot of non.

People that don't have a bank account and so the portfolio is growing we've grown with adequate prices. If you look at the curve of prices in the market we have the most competitive prices.

Speaker #3: And you know, ballpark, 20% when you exclude Itaú from the sample, you see that the impact is more relevant than that. For vehicles, it's no different.

Talks about the quality of the clients that we penetrated with the product than we are migrating from the ultra the new product.

So we're getting to production levels that are very good.

Speaker #3: We see that, well, vehicles can be a change of write-offs, policies of write-offs. No, the short-term delay of vehicles is coming stronger than what we observed.

With a new product and so there is a ramp up that has demonstrated superior than today, we are very well positioned and where what very well structured and we are very satisfied we've seen two problems credits, which we've seen.

Speaker #3: Short-term delay doesn't have any relationship with the policies of write-off. So we continue be very consistent. We have gained shares with the clients, and we publish the targets for the organization.

Our level of delinquency that is higher.

The full portfolio as a whole not in our case so.

Speaker #3: We've penetrated in an important way, and we've grown two digits in this public. This is a management strategy. I believe that every bank has their own strategies, their own policies, their own criteria.

And the way that we structure ourselves as true we had the breakdowns, we have true installments payment and we saw cube.

Speaker #3: Ours is this, and it has been very consistent. Specifically, when you allocate capital in an incorrect way with the transactions and you see profitability, with the capital allocation.

Saw breakdowns on the payments from the first or the second one when we found a mechanism to advance even NDS relationships given the profile of decline that we're working so we are excited with the evolution I believe there is still a long ways ahead.

Speaker #3: So this has been an important driver. No, the first point I wanted to highlight. I think that all the investments that we've one with the super app, the digital journeys with the completeness, taking off transactionality, we don't want to make the client go to the branch.

Where the market was a client so as the companies that have tried that Randy is with UBS everybody is doing their homework.

Nonetheless, I see a positive result, it doesn't really move the needle in a relevant way, but directionally. We are down the right path. Thank you Milton and now the next question with modest Salamis Heidi Bradesco.

Speaker #3: They go if they want to go. So all the digital transformation was necessary. If they want to stay in the super app, or if they want to go to the branch and talk to the manager, of an onsite or remote agent or a consultant of real estate or insurance, it's a decision of the client.

Or is there.

<unk>, we don't hear you Marcello hi, everyone, regardless of that opportunity.

Thank you for the opportunity at a bunch of his thoughts on that.

But it won't look at a whole Donald Tim My question I wanted to go back to growth.

Speaker #3: We cannot oblige the client to use one channel or the other because of a lack of offering. So we try to offer all. We are very satisfied with the evolution of the super app, and we are looking at the NDS absolute.

As a deemed on my side and I understand the math is really when we look at the line to line.

We've seen several lines of ways.

Weaker growth than what we've seen in the previous quarter.

Speaker #3: That is it's drastically we've uced the digital that had a NDS. So we are in the arena. Credit of arena for the cost of quality and with opportunities.

The natural persons and the credit card.

The vehicle portfolio and even the rhythm of the growth of Smes is <unk>, it's a bit slower so about the guidance and when we look at the guidance I think that the only line of the guidance that seems more at risk if the growth of portfolio.

Speaker #3: Continue to evolve. And to launch new products, we launched 19 new products. And we shown the results of some. And there's a new normal of bank.

So I wanted you to tell us the heavy job you review the guidance.

Speaker #3: It's not a project. It's not that we delivered a product. And it's engagement. It's activation. It's better penetration in the relationship. And this is a new normal of the bank.

So, it's stable and growth and I imagine that.

Having the level of trust that you have in regards to the middle point of the average.

So we can expect so we can understand what we can expect in the next quarters and what is the portfolio that should help in the composition of the guidance.

Speaker #3: We're going to have a new bank digital bank for the client. We have 70 million clients, and within this public, we have different profiles.

Now to continue with this question is the issue of the dividend, but it's something you can play it.

Speaker #3: We have those that prefer the physical branch. There are the specific publics for specific publics. They demand remote service. So this is the advantage.

It really gives you the impression that the payouts myself the percentage can be higher than this year than last year.

Speaker #3: We can service a client in all of the contexts. And I am certain that the super app that we've done is going to be a facilitator.

I don't know if its early to say this but I wanted you to share that celebrate thank you. Thank you Marcella. Thank you for the question.

Speaker #3: For the evolution of the efficiency level of the retail segment. Well, now we have Gustavo Schröder. Gustavo Schröder from Citibank. Floor is yours. Hi, Gustavo.

It's a pleasure to see you again.

Yes.

I think youre right when you look at the realized and projected.

And in fact, when we do a review of the guidance.

Speaker #3: Thank you. Thank you, el. Congratulations on the solid results. We've discussed the strategy of the bank. And about the private consignado. So the payroll loan, so private payroll loans.

To review a line per line. So we revisited all lines because if there is an information that is better available then we want to correct whenever necessary, but in fact, when you look apparently the biggest challenge is in the portfolio.

You are right in this vision and even so we reaffirmed the guidance. So the best information that we have today has the effect of the foreign exchange.

Speaker #3: I wanted you to evaluate how you see the evolution of the product. And how Itau wants to position in the consignado privado private payroll loans.

That is important the real is gaining.

Gaining value in regards to the other currencies and that plays against the guidance of consolidated of the portfolio. So the currency can explain a piece of the behavior is difficult to project.

Speaker #3: Well, thank you for the words and the participation in our call. Well, I believe that this is a product in evolution. And we've seen this is a great idea.

The foreign exchange rate for the second semester, if it's going to impact the growth of portfolio or not but we continue to believe that all of the segments and the way that we planned for this year and we've done the guidance, we'll be able to deliver what is predicted in our guidance.

Speaker #3: It makes a lot of sense. We see the portfolio as a whole of the product that is growing in the market. And we're trying, well, we are growing in a 40 billion reais, but it's limited to specific associations.

We don't get point guidance item give you I'm not going to tell me if its the middle point, we gave you a range and we still believe that the range is the best information our best expectation for the growth of portfolio anything different from that naturally adjustments will be done, but we continue to be trusting that we can deliver the guidance with the information that we have not only defense.

Speaker #3: We always had 30% of that market. So it's a market that we have a relevant participation, but it's a small market. It's a market that is growing.

Speaker #3: So we see an evolution of portfolios. All throughout the last month, at the beginning, there was more activity than because of operational issues. Risk aspects, we've seen a deceleration.

So the scenario depends on cycle it depends on demand.

We've seen a demand that is weaker with higher interest rates. So there is a there are several factors that affect and also it's well distributed there is no specific segment. We continue to believe that we continue to grow in the natural person as we grow.

Healthily in the companies and big companies as well.

All of the segments, so with lesser degree with varying degrees, but there isn't a specific segment that will perform better than the other so I believe that today, we are within our expectations initial expectations. This is the first 0.2nd point.

Oh Wow.

We don't give you guidance of payout. So your question you asked if its earlier, yes. It is earlier, but directionally what I wanted to tell you as a following Chris a couple of calls we've grown capital with a lot of quality.

Expanded set one and one 5%.

<unk> adjusted by the provision of the interests of our capital so.

We are with our rhythm of cash capital generation that is very solid for the second semester.

To the future we are going to expect to see how we're going to deliver the results for the next semester with a micro and macro scenarios.

Solid results, we have to sit down and see the projection what we expect of the growth of our portfolio the opportunities.

The investments naturally we're going to see our appetite we've seen 12.

<unk> set one plus before the distribution out of interest.

We have regulatory impacts the operational risk and credit risk that we paid the first installment.

The four times.

Payments without interest rates.

Next first quarter over the next year, there is significant weight those protection break and collaborate well.

Objective is not to retain the access it's no longer extraordinary payments or a traditional payment of dividends.

It is a recurrent as we generate a good base of capital and this is the best expectation and we are certainly going to have an additional payments.

Same mechanism, where the same modeling that we've used for the payment of this year.

<unk>.

From the standpoint of logic of distribution and then next year with more information we can detail to you, but we are positive in regards to that.

Now switch to English as we have do you feel about the for Goldman Sachs with Us Tito the floor is yours.

Great Thanks, Gustavo and.

Milton Thank you for the call and taking my questions and congratulations on the strong results. I guess my question is in terms of your maybe longer term or sustainable profitability Roe.

A strong use of excess capital.

But you can return you have room to improve efficiency. So I mean, if we continue to extrapolate what <unk> been doing Roe could.

Continued to go up I don't know $24 25, and cycle can change to interest rates will move but just to think how do you think about the sustainable profitability and I see that in the context of thinking about the competitive environment right. I mean, you've de risked on the lower income side, we have some very strong competitors there are lot of.

The competitors are trying to get more into high income, where I think you have a bit of a competitive advantage.

Given this sort of changing competitive landscape.

You continue to produce strong results.

What do you think is the right level of sustainable Roe.

At least from a high level just given all these moving parts that you have thank you.

Hi, Tito. Thank you for your initial words could pursue here. Thank you for coming.

My view is that even though we don't guide our ROE for the long term.

We never did and we keep thinking that this is the best way to give you a right asked us about the way we are seeing the future.

We believe that there are a lot of elements as you said so the macro is relevant to the level of activities is relevant at the end of the day the cost of equity is relevant because if.

There is a change in the long term the cost of equity we might see the ROE, we somehow behaving in a different way, but always looking to the capital gains value creation.

We have.

<unk> S. A our mantra here in the bank the way we manage the organization. So I believe we're out looking for this year I think it's not not.

Not so tough to say, what I'm going to say, but the 20 plus as reasonable to explant. They expect.

Somehow is implied.

In the guidance that we just adjusted but we think we still have the capability and delivers to keep delivering good profitability for the bank.

Of course, it depend on competition and competition is.

Hey stuff its always tough in all the segments. We know we have a lot of very good banks are working everyday trying to grow in the segments weren't somehow.

We've been leading.

But we believe that we have the capabilities we have.

The teams, we have the structure and all the investments we've been making throughout the years to compete very strongly to keep delivering a good position in all those segments, where we are so I.

I don't see reasons why today with the information we have.

To see the profitability going under.

The levels that we've been believing him a lot.

Okay.

I think that this level of profitability. So far is sustainable let's see the coming quarters. What are the challenges we have for Brazil for the macro for the vehicle for competition for interest free for activity all of them have a relevant impact in the level of profitability, but I don't foresee up till now are reasonable.

While we cannot keep delivering good level of profitability.

Yes, no. Thank you that's very hard to keep the discussion in English as we have Nicolas <unk> from Bank of America with US nickel is good to see you. Please go ahead.

Okay. Thanks.

CFO.

Also mirliton Gabriele.

Milton I have a question on the <unk>.

I think that you alluded to this a bit in your initial remarks, you announced that you were going to be calling.

Of your dollars 81.

My question is I kind of I assume that's not gonna be $1.81. Each one have been spun to replace.

Basis points of capital, but please let me know if that's not correct and then the second question on the announcement you mentioned.

So you said the impact on total capital of 65 basis points from calling both of these 81 baidu distinguish between an impact on tier one on 81 and tier two capital and I wanted to ask what what's the reason for the impact on tier two if you are calling both 81 is on my understanding you said, the <unk> count, 100% I say tier one capital before and after the call date.

No its completely right clinical as there is low impacting tier true.

Sure.

What we did as a liability management as we are seeing a good opportunity to initially in Brazil. So we did almost 10 billion highest issuance to seeing this first semester.

I'd say more recently 5 million horizon local 81 <unk>.

A very good market deep market in a very good conditions. So the level of the capped off the bank is 13.1, we.

And we don't think we need to be.

Full power in 80 115, so we are very comfortable to go behind it. So after all of those calls the several hundred million in the $750 million bulbs 80, once we should go below.

One five our best estimate is to be one three and we are very comfortable with that so in the short term with the market conditions. We've been seeing we don't anticipate going to be international market to do new issuances for a tier one of course, if there was opportunity in Brazil with a good level of price we may issue more.

Always looking to the restriction we have that is one five even though well we fulfilled today.

51, we have almost 1918.

<unk> ones.

But we only we can only use the $1 five that's why we remove the figures the way I just made the presentation. So this is the way for the other ones that are maturing and Churchill, though we have options and call options by the year end, it's still too early to anticipate what will go.

To do it and we are going to take in consideration that the level.

Of capital optimizations in the tier two et cetera.

Information to make the decision either we have to call. Those bolts of course, when you are decreasing the level of capital optimizations in the Churchill. So there was no impact to ensure true 100% to 81 tier one level one capital and this is what we've been calling that out.

Seem to be yesterday.

Our results figures.

Very much.

Our global goes through ports normally go back to Portuguese with in light of initio from Danielle <unk> the floor is yours.

Congratulations and thank you for the opportunity and we also have any out of the summer.

Congratulations on the results I have two questions first in regards to your mention of new pockets of crowded.

Probably in the low income.

With the improvement of the natural persons, you'll see the indices improving a lot throughout the year the improvement of one it will rollout.

Just a bit.

Reduction of food brands are you revisiting the strategy of the Massify.

Third we were.

Where we are we expecting what are we but it is a reduction of cost, but what is missing in the segment for you to move forward and the second question is in regards to the delinquency.

See in the industry a worsening it's been a while six months half of year that is.

<unk> been consistent in the industry and you have numbers that are very good.

<unk> you.

Back to a normalization.

Throughout the year, but the natural persons.

It's still very low so I wanted you to.

No what is the main.

<unk> of this year.

The main cause of this improvement vis vis what you had before.

Do you think that you improve and can you say a lot of time with this discrepancy in regards to the industry can you keep it.

The new harvest.

Still good enough for you to keep.

Such a higher GAAP in regards to the industry.

Thank you and the shield pleasure to see you. Thank you for the initial words now let me start by the second one.

See any return with information, thereby available to have discontinuity onto credit looking ahead, we're very.

Are you comfortable with delinquency level I talked about SMA. The expectation is that normalization can be 10, 20 basis basis points, Andy indicator of delays and looking ahead, but within expectation, it's a mechanical issue.

Not having their delinquency.

And the portfolio growing and produces a better indicator, but let's just say artificially one and normalize as we go back to it.

Goes back to the parameters that we expected before but Brazil is cyclical.

If you look at the cycle of the activity.

So with the information that we have today, we kept the guidance of the cost of credit.

I understand that this is the best.

Information, we had an expansion.

The net margin and we've grown with quality.

We don't see a reason that we shouldnt grow with policy all the harvests no deviation of what we have as a target audience. So that portfolio long term vision is determined and so we can continue to perform of.

Of course volatility can always come up.

That happened in Brazil, we have seen in many many times.

I believe that our portfolio is much more resilient than what we had in the previous period.

The diversification of portfolio management, all the way that we manage.

Portfolio in the wholesale.

Retail is a more resilient portfolio last volatile than what we observed.

But it also potential we have.

Great penetration in credit cards that we are market leaders ways, our position ill highlight in regards to the second.

Place and even though we have products that are more volatile.

Okay.

We've grown with quality and a target audiences.

And then important way and here, we will not FERC.

A very.

We're conscientious balanced management you have short term results.

Just drive short term results because Daniel for this cost of credit for two or three years.

We want to have the decisions that are positive and this is the way we manage the balance of the bank and that we're comfortable.

Yeah.

Retail wholesale.

As for everything there is an interest in every business.

Now it's on the performance of Agribusiness. This segment gesture gave you zoom.

I see that this is a segment that in the last three years has suffered.

The price of commodity side, our margins climate issues that R&D.

Or in some regions the cost of capture with the leak rates going up.

It's a sector that from previous years had extraordinary years very strong years and over the last few years difficult years, while we.

You've seen and we've heard in the market more volatility in our portfolio.

Our portfolio from the management standpoint is very balanced we are in all the agriculture with all relevant variables selected.

Agricultural distribution.

We are big clients of agribusiness the rural produce producers that invoice higher volumes with higher invoicing very well defined agricultural monoculture.

We should be present, and we are resilient and we manage to perform our indicators showing a very healthy way regardless of the challenges and we have every business portfolio that is about 130 billion reais. So when we look at the percentage.

The RJ so we have in the market our market share is 5%.

With.

130 billion Reais in the portfolio. So we've managed to perform with portfolio management that is very active.

And very careful way to good.

Penetration of guarantees.

The segment.

Adequate cultures, so I wanted to clarify their staff about agribusiness. So the portfolio is very good.

And always subject to changes in this scenario.

Your first question about the new pockets.

We're going step by step our objective is not just youre open to credit.

There is an evolution to capture any efficiency levels are one thing.

As an embryo of this public that we can serve.

Can work with more emphasis but this is a very qualified board anytime we have plentiful.

Medicine hat.

It's not just low income.

The all time, but these are income so you have this public inquiry.

Derisking the portfolio reduce it.

The position MYR vulnerable publix, a reduced the volatility as you have more comfort with the right efficiency level and we are evolving our credit levels artificial intelligence machine learning everything that is modeling.

High level, we have volume to assembly.

Well, let me have the opportunity we can evolve.

Consistent and careful we are not we don't want to rush, we want to do this long term vision very well.

Bacterin English Carlos Gomez Lopez from HSBC Carlos could you. Please go ahead.

Again, thank you for making the thank you think all the questions.

Really appreciate it so two brief questions on two areas, we haven't done one on the.

Corporate expense.

So how the market has been quite good.

Any kidney.

Celia market seems to be operating with very low levels of corporate especially do you think they make economic sense to your expected to increase in the future.

Could you comment on one area portfolio, we don't talk too much about which is the mortgage portfolio.

I think it would be the one that is growing the most right now.

So 70% how long are you doing it with these kinds of things.

Oh. Thank you. Thank you Carlos Thank you very much so yeah, you're right so the spreads.

Same market, especially for the big corporates in general.

The market is very tight and the companies have been accessible market have been able to do at a very competitive level of prices. The same way for us when we go to the market and access.

<unk> hundred 80 ones as.

You were saying that I'm mentioning so.

For everyone.

Let's see because we still have a lot of demand with these levels of interest rate a lot of flows going to the credit industry and that's the reason why we are seeing.

This level of prices, let's see looking forward if the credit scenario keeps delivering the way we've been seeing.

There is no volatility we believe that this is possible that we will keep looking for this level of prices, but will depend on lots and volatility I mean, the credit market. If there is any volatility we might see some changes in prices, but this is about what we are foreseeing right now.

And the market has been very active even though the volumes have been lower than what we saw last year.

Level prices are still very very competitive.

Does that have a long term liability program more infrastructure infrastructure investments are taking the advantage to go and issue with this level of prices. So this is one.

And the second one on the margin side.

No.

I think all the industry it's over.

Subscribe I would say in the levels of what we call the saving accounts.

We look to the car.

Our ability to make price.

Combining what we have in terms of saving accounts.

Are the private industry, we are number one.

In terms of volumes, so we still have <unk>.

Less needs.

Even though we do have needs to access the market with other instruments, the let off credits and things like that.

Uh huh.

We've been accessing markets reporting format.

LCI and others.

Makes a good proposition to their funding, we will probably be some cleaning price which is important.

But at the end of the day, we still see a lot of demand.

From clients for the good segments.

That's where we believe there are more resilient more offering clients.

So that's where we've been able to do.

Do good growth.

In terms of market share, we've been able to do 45, 46% of market share on the private.

Thanks.

And we know that this product is very important for the relationship with our clients long term relationship and we have the edge of having a bigger saving accounts.

Amounts, which make us more competitive in general to access those clients. So it's a good growth a very solid and consistent and we still believe there will be opportunity to grow.

Especially on the retail.

The wholesale orders do you have the capability to produce.

Transactions, we've been very cautious here.

And care of the clients that we have but avoiding.

Credits, but maybe more risk here, we see the market underwriting.

Some risks that we don't believe are sustainable in the long term. So we've been very disciplined with.

The real estate, especially for on the mortgage side.

Yes.

I think for the last question, we have naturally a corn field from Jpmorgan.

See you.

Yes.

Thank you Gustavo great to see you again.

Did you see law.

I'm going to mention my question has to do with capital and a lot of them.

Yeah.

Sorry to Nicholas <unk>.

Was that there's no impact into tier two I was confused another point.

Because you mentioned.

They cannot have over 150 basis points and 81, I always understood that <unk> thought that it was a level optimal.

<unk>.

You could have more than 150 basis points because of it it's already had it. So I just wanted to clarify is there any change in the regulation in Brazil, and now you cannot issue more than a 150 basis points of 81.

Hi.

Thank you for your presence.

There is no restriction.

Half the volume that we one initiative voluntary one central bank only allowance that we use policy layer with water maximum one and a half of capital index and 81.

We have by different reasons, and we have a liability management that has been done imagined and we issued 10 billion realized in the first semester.

Perpetual our allies.

Nicolas come after so there's a temporal lack of.

You'll have an excess of 81 during that time.

You cannot use more than one and a half just by legislation. So that access that youll have has a higher cost as a cost of 81, but that you do not use it for.

81 purposes. So there is a temporal mismatch.

The issuance and exercise of the call and Thats what happened.

And David we advanced a little bit nothing wrong, but what we've seen is a capital level that the bank is running 13 point borne by the capacity of capital generation of the core there is no need that we run at one five 100% all the time. So we are very comfortable because it doesn't affect the appetite of risk of the bank.

And much less T policy of dividends, having more or less 81.

Is it not.

What do you mean parcel a limitation for the distribution of dividends, we always do.

Plenty on the core equity so the logic as to do we saw the opportunity of exercising our call.

It's an economic decision based on price and we are comfortable on running lifestyle more than I have so first we don't have the appetite should be running were going to run at one and a half we understand that there is an opportunity for capturing at the local market that would justify us anticipating and capture if that's not the case then we are very comfortable running with.

One three or less than $1 three if we understand that there is an opportunity given the level of.

Capital that we have of core equity.

And then we can have.

Through the cycle.

The utilization of the key one and a half.

Which is why they're happening now it is not a limitation, though change in appetite, it's more circumstantial issues that were very comfortable with.

In fact, if there is any doubt in regards to a day or two there is no relationship to the discussions of the call. The tier two the decisions will be made in the future with more information taking into consideration what I just discussed you nikolas.

Yeah.

Utilization of capital that will be an important variable that you attributed the economic value of that issuance.

This is why we are saying.

This is clear.

Yeah.

Thank you Milton <unk> and all of you I saw something equal.

So all of you that taken apart with our.

Q&A session on our video conference.

I'd like to give you the floor meltdowns you closed this year.

Thank you very much for Europe, IDE submission for the questions.

Uh huh.

Yes.

I think that the point that remains its culture.

The strength of the organization in the sense that we are all dedicated.

Looking at the scenario.

And paying attention to the changes in dissatisfied thinking that we can always do something better everyday. This has made the bank if all while throughout the years. Once again. Thank you very much we're very happy and satisfied with the results that.

That surpassed water under the bridge.

We've discussed the results from the nature of work for the next quarters, believing in the value of the franchise on a long term and this is why we believe every day.

<unk> on our sustainable growth and evolving with our client satisfaction centrality solving the pain of the clients' everyday and we are in a unique moment not only over the balance and the results, but strategic positioning to phase III challenges up ahead, and we can evolve and our digital journey.

Artificial intelligence and everything answered there with technology that is available always.

Paying attention to our clients and naturally our investors. Thank.

Thank you very much for your trust. Thank you for the messages and our questions.

The.

The challenges are up ahead of them, we still have a lot of work to do thank you very much.

Okay.