Q2 2026 Itau Unibanco Holding SA Earnings Call

August 5, 2026

Speaker #1: You will see an executive presentation focused on the key drivers of our results. With the objective of leaving ample time for our traditional Q&A session.

Milton Maluhy Filho: You will see an executive presentation focused on the key drivers of our results with the objective of leaving ample time for our traditional Q&A session. We delivered a strong quarter with consistent results, high profitability, and excellent credit quality indicators, very much in line with the consistency we have been delivering over recent quarters. Let's move directly to the numbers. This quarter, we delivered recurring net income of BRL 12.4 billion, representing growth of 7.8% compared to the Q2 of last year and of 1% compared to the previous quarter. This was, therefore, another very solid result. How does this translate into profitability? On a consolidated basis, ROE reached 24.3%, while in Brazil it reached 25.7%. As always, we also present profitability adjusted to a CET1 capital ratio of 11.5%, which is close to where we believe the market operates and is also our minimum capital appetite threshold.

Speaker #1: We delivered a strong quarter, with consistent results. High profitability and excellent credit quality indicators. Very much in line with the consistency we have been delivering over recent quarters.

Speaker #1: Let's move directly to the numbers. This quarter, we delivered recurring net income of R$12.4 billion, representing growth of 7.8% compared to the second quarter of last year.

Speaker #1: And of 1% compared to the previous quarter. This was therefore another very solid result. How does this translate into profitability? On a consolidated basis, ROE reached 24.3%.

Speaker #1: While in Brazil it reached 25.7%. As always, we also present profitability adjusted to a CET one capital ratio of 11.5%, which is close to where we believe the market operates and is also our minimum capital appetite threshold.

Speaker #1: On this basis, consolidated ROE would have reached 25.1%, while ROE in Brazil would have reached 26.7%. This is perhaps the most comparable metric across earnings releases, and it demonstrates our ability to generate strong returns not only in Brazil but also on a consolidated basis.

Milton Maluhy Filho: On this basis, consolidated ROE would have reached 25.1%, while ROE in Brazil would have reached 26.7%. This is perhaps the most comparable metric across earnings releases. It demonstrates our ability to generate strong returns not only in Brazil, but also on a consolidated basis. Turning to the loan portfolio, we posted healthy growth, reaching BRL 1.522 trillion, up by 2.7% quarter-over-quarter and by nearly 10% year-over-year. This reflects our ability to grow with quality, supported by sound portfolio dynamics and disciplined capital allocation. Moving on to NII with clients, we also delivered a very solid result of BRL 32.6 billion, an increase of 3.3% compared to the Q1 2026 and of 5% compared to the Q2 2025. It is important to highlight this acceleration. Results were very solid and I will provide more detail shortly.

Speaker #1: Turning to the loan portfolio, we posted healthy growth. Reaching 1.522 trillion riais, up by 2.7% quarter over quarter. And by nearly 10% year over year.

Speaker #1: This reflects our ability to grow with quality. Supported by sound portfolio dynamics and disciplined capital allocation. Moving on to NII with clients, we also delivered a very solid result of 32.6 billion.

Speaker #1: An increase of 3.3% compared to the first quarter of 2026 and of 5% compared to the second quarter of 2025. It is important to highlight this acceleration.

Speaker #1: Results were very solid, and I will provide more detail shortly. Moving to non-interest expenses. Growth remained well under control at 3.1% year over year.

Milton Maluhy Filho: Moving to non-interest expenses, growth remained well under control at 3.1% year-over-year. It is worth remembering that we have been investing continuously for many years, always with a long-term perspective. These figures demonstrate not only our ability to continue investing in the business with quality, but also our ability to pursue efficiency wherever it needs to be found on a daily basis. This reflects strong cost discipline across the organization. All of this has translated into a common equity Tier 1 ratio of 12.3%, once again demonstrating a very solid and high-quality capital base with an increase of 30 basis points compared to March. It is worth remembering that we did an early dividend distribution at the end of last year, which meant that we entered 2026 with a highly optimized capital position.

Speaker #1: It is worth remembering that we have been investing continuously for many years. Always with a long-term perspective. These figures demonstrate not only our ability to continue investing in the business with quality, but also our ability to pursue efficiency wherever it needs to be found on a daily basis.

Speaker #1: This reflects strong cost discipline across the organization, all of this has translated into a common equity tier one ratio of 12.3%. Once again demonstrating a very solid and high-quality capital base.

Speaker #1: With an increase of 30 basis points compared to March. It is worth remembering that we did an early dividend distribution at the end of last year, which meant that we entered 2026 with a highly optimized capital position.

Speaker #1: We also had the regulatory phase in effects, which still had an impact during the first quarter, and yet we continued to generate capital with strong quality.

Milton Maluhy Filho: We also had the regulatory phase-in effects, which still had an impact during the Q1. Yet we continued to generate capital with strong quality. I will return to this topic in more detail later in the presentation. Turning back to the loan portfolio, I will walk through the figures from the bottom up, as that may be easier to follow. In Brazil, the portfolio grew by 9.6% year-over-year and 2.6% quarter-over-quarter, which is very healthy growth. Large companies posted growth of 10% year-over-year and 4.4% quarter-over-quarter, once again reflecting strong discipline in capital allocation and expected returns. These are very long-term balance sheet transactions, which makes disciplined capital allocation particularly important. Next, let me provide more details, starting with micro, small, and medium-sized companies. We posted healthy growth of 1.5% in the quarter and 11.6% year-over-year.

Speaker #1: I will return to this topic in more detail later in the presentation. Turning back to the loan portfolio, I will walk through the figures from the bottom up, as that may be easier to follow.

Speaker #1: In Brazil, the portfolio grew by 9.6% year over year, and 2.6% quarter over quarter, which is very healthy growth. Large companies posted growth of 10% year over year, and 4.4% quarter over quarter.

Speaker #1: Once again reflecting strong discipline in capital allocation and expected returns. These are very long-term balance sheet transactions, which makes disciplined capital allocation particularly important.

Speaker #1: Next, let me provide more details, starting with micro, small, and medium-sized companies. We posted healthy growth of 1.5% in the quarter and 11.6% year over year.

Speaker #1: More important than growth itself, however, is the quality and risk profile of this portfolio. The portfolio of government-backed programs grew by 7.2% in the quarter, while originations increased by 47.3% over the same period.

Milton Maluhy Filho: More important than growth itself, however, is the quality and risk profile of this portfolio. The portfolio of government-backed programs grew by 7.2% in the quarter, while originations increased by 47.3% over the same period. Once again, this reflects our discipline in delivering the best products under the best conditions while maintaining strong risk management and capital allocation standards. Payroll lending has continued to be a very important growth driver for us, particularly private payroll loans under the new product. The overall payroll loan portfolio grew by 3.5% in the quarter and 11.7% year over year. When we take a closer look at private payroll loans, the portfolio expanded by 14.3% in the quarter and 90.1% year over year. From the outset, we were able to capitalize on this opportunity very effectively, delivering value to our clients while generating strong and consistent growth, with delinquency remaining fully under control.

Milton Maluhy Filho: More important than growth itself, however, is the quality and risk profile of this portfolio. The portfolio of government-backed programs grew by 7.2% in the quarter, while originations increased by 47.3% over the same period. Once again, this reflects our discipline in delivering the best products under the best conditions while maintaining strong risk management and capital allocation standards. Payroll lending has continued to be a very important growth driver for us, particularly private payroll loans under the new product. The overall payroll loan portfolio grew by 3.5% in the quarter and 11.7% year-over-year. When we take a closer look at private payroll loans, the portfolio expanded by 14.3% in the quarter and 90.1% year-over-year. From the outset, we were able to capitalize on this opportunity very effectively, delivering value to our clients while generating strong and consistent growth, with delinquency remaining fully under control.

Speaker #1: Once again, this reflects our discipline in delivering the best products under the best conditions, while maintaining strong risk management and capital allocation standards. Payroll lending has continued to be a very important growth driver for us, particularly private payroll loans under the new product.

Speaker #1: The overall payroll loan portfolio grew by 3.5% in the quarter, and 11.7% year over year. When we take a closer look at private payroll loans.

Speaker #1: The portfolio expanded by 14.3% in the quarter and 90.1% year over year. From the outset, we were able to capitalize on this opportunity very effectively.

Speaker #1: Delivering value to our clients while generating strong and consistent growth. With control. This also affects the dynamics of our personal lending portfolio. Since for clients who are eligible for private payroll loans.

Milton Maluhy Filho: This also affects the dynamics of our personal lending portfolio, since for clients who are eligible for private payroll loans, particularly formally employed workers, we have increasingly prioritized this product over traditional unsecured personal lending due both to its pricing advantages and its priority in the repayment structure. Turning to mortgage lending, it is important to remember that our funding structure is differentiated relative to the market, enabling us to remain highly competitive in this segment while serving our clients effectively and allocating resources efficiently. The mortgage portfolio grew by 3.9% in the quarter and by 13.3% year over year, reaching BRL 152 billion. In fact, the mortgage portfolio has now surpassed our credit card portfolio, which has historically been one of our most important portfolios at approximately BRL 150 billion.

Milton Maluhy Filho: This also affects the dynamics of our personal lending portfolio, since for clients who are eligible for private payroll loans, particularly formally employed workers, we have increasingly prioritized this product over traditional unsecured personal lending due both to its pricing advantages and its priority in the repayment structure. Turning to mortgage lending, it is important to remember that our funding structure is differentiated relative to the market, enabling us to remain highly competitive in this segment while serving our clients effectively and allocating resources efficiently. The mortgage portfolio grew by 3.9% in the quarter and by 13.3% year-over-year, reaching BRL 152 billion. In fact, the mortgage portfolio has now surpassed our credit card portfolio, which has historically been one of our most important portfolios at approximately BRL 150 billion.

Speaker #1: Particularly formally employed workers. We have increasingly prioritized this product over traditional unsecured personal lending. Do both to its pricing advantages and its priority in the repayment structure.

Speaker #1: Finally. Turning to mortgage lending, it is important to remember that our funding structure is differentiated relative to the market. Enabling us to remain highly competitive in this segment while serving our clients effectively.

Speaker #1: And allocating resources efficiently. The mortgage portfolio grew by 3.9% in the quarter and by 13.3% year over year, reaching 152 billion. In fact, the mortgage portfolio has now surpassed our credit card portfolio, which has historically been one of our most important portfolios at approximately 150 billion.

Speaker #1: Mortgage lending is a long-term product that fosters strong client loyalty and reciprocity, which is why this strategy is so important for us. Today, we are the largest private sector bank in this segment, with 36 billion riais in originations over the last 12 months and a 55% market share among private banks.

Milton Maluhy Filho: Mortgage lending is a long-term product that fosters strong client loyalty and reciprocity, which is why this strategy is so important for us. Today, we are the largest private sector bank in this segment with BRL 36 billion in originations over the last 12 months and a 55% market share among private banks. Once again, this demonstrates how our funding structure, our clients' investment profile, and our funding capacity allow us to sustain a mortgage portfolio at these levels. Let me turn to NII with clients and highlight two points. Total NII increased by BRL 1.1 billion, representing growth of 3.3% in the quarter, including working capital and other effects. We posted growth in the working capital and other categories, in addition to the impact of investment rates, and were able to monetize our capital very effectively, reaching BRL 3.9 billion in working capital during the quarter.

Speaker #1: Once again, this demonstrates how our funding structure, our clients' investment profile, and our funding capacity allow us to sustain a mortgage portfolio at these levels.

Speaker #1: Now let me turn to NII with clients and highlight two points. First, total NII increased by R$1.1 billion, representing growth of 3.3% in the quarter.

Speaker #1: Including working capital and other effects, we posted growth in the working capital and other categories, in addition to the impact of investment rates. And we were able to monetize our capital very effectively, reaching $3.9 billion in working capital during the quarter.

Speaker #1: When we look at core NII, we see growth of 800 million riais. Or 2.9% in the quarter. Broadly distributed across all components. Average volumes contributed positively.

Milton Maluhy Filho: When we look at core NII, we see growth of BRL 800 million or 2.9% in the quarter, broadly distributed across all components. Average volumes contributed positively. Product mix was broadly neutral for margins. Liability margins and asset spreads were slightly positive, and we also benefited from a calendar effect as this quarter had one additional calendar day, which positively affected liabilities. Latin America and other also contributed positively. As I mentioned, this was a broadly distributed result demonstrating our ability to generate core NII alongside an effective strategy for monetizing working capital and supporting the bank's capital generation. When we translate NII into margin percentages, particularly risk-adjusted NIM, which is the way we manage the balance sheet, we have positive news to share. As I always say, generating a very high margin only to give it back through credit costs is not a sensible capital allocation strategy.

Speaker #1: Product mix was broadly neutral for margins. Liability margins and asset spreads were slightly positive. And we also benefited from a calendar effect, as this quarter had one additional calendar day, which positively affected liabilities.

Speaker #1: Latin America and others also contributed positively. So, as I mentioned, this was a broadly distributed result, demonstrating our ability to generate core NII alongside an effective strategy for monetizing working capital and supporting the bank's capital generation.

Speaker #1: When we translate NII. Into margin percentages. Particularly risk-adjusted NIM, which is the way we manage the balance sheet, we have positive news to share.

Speaker #1: As I always say, generating a very high margin only to give it back through credit costs is not a sensible capital allocation strategy. What we have shown consistently is our ability to manage margins with discipline and consistency.

Milton Maluhy Filho: What we have shown consistently is our ability to manage margins with discipline and consistency. Risk-adjusted NIM reached 6.2%, representing a slight increase of 10 basis points in the quarter on a consolidated basis. The same dynamic was observed in Brazil, where NIM increased from 6.6% to 6.7%, reflecting our disciplined portfolio management and delivering very solid results. This is very positive news on the margin front. Turning to NII with the market. Results may appear stable compared to previous periods, I believe that we are all aware of all the challenges we have been facing in financial markets and the level of volatility we have experienced both in local and global markets. Even so, we delivered another solid quarter supported by consistent risk management. This discipline and the quality of the results we deliver are extremely important.

Speaker #1: Risk-adjusted NIM reached 6.2%, representing a slight increase of 10 basis points in the quarter on a consolidated basis. The same dynamic was observed in Brazil, where NIM increased from 6.6% to 6.7%, reflecting our disciplined portfolio management and delivering very solid results.

Speaker #1: Therefore, this is very positive news on the margin front. Turning to NII with the market. Although results may appear stable compared to previous periods, I believe that we are all aware of all the challenges we have been facing in financial markets.

Speaker #1: And the level of volatility we have experienced. Both in local and global markets. Even so, we delivered another solid quarter, supported by consistent risk management.

Speaker #1: This discipline and the quality of the results we deliver are extremely important. As a result, NII with the market reached 900 million riais. We also continue to incur costs associated with capital index hedge ratio, but as part of our strategy to protect our capital position and enhance earnings predictability, we continue to believe that this remains the appropriate approach for the bank's balance sheet.

Milton Maluhy Filho: NII with the market reached BRL 900 million. We also continue to incur costs associated with capital index hedge ratio, as part of our strategy to protect our capital position and enhance earnings predictability, we continue to believe that this remains the appropriate approach for the bank's balance sheet. Even considering this cost, we delivered a very solid performance in NII with the market. Turning to commissions, fees, and results from insurance, I will once again comment on the figures from the bottom up. You will see that results from insurance, pension plans, and premium bonds increased by 8.7% year over year and 12.8% compared to H1 2025. Our core insurance operation continues to grow very consistently on both a quarterly and year-over-year basis.

Milton Maluhy Filho: As a result, NII with the market reached BRL 900 million. We also continue to incur costs associated with capital index hedge ratio, as part of our strategy to protect our capital position and enhance earnings predictability, we continue to believe that this remains the appropriate approach for the bank's balance sheet. Even considering this cost, we delivered a very solid performance in NII with the market. Turning to commissions, fees, and results from insurance, I will once again comment on the figures from the bottom up. You will see that results from insurance, pension plans, and premium bonds increased by 8.7% year-over-year and 12.8% compared to H1 2025. Our core insurance operation continues to grow very consistently on both a quarterly and year-over-year basis.

Speaker #1: Even considering this cost, we delivered a very solid performance in NII with the market. Turning to commissions, fees, and results from insurance, I will once again comment on the figures from the bottom up.

Speaker #1: You will see that results from insurance, pension plans, and premium bonds increased by 8.7% year over year and 12.8% compared to the first half of 2025.

Speaker #1: Our core insurance operation continues to grow very consistently on both a quarterly and year-over-year basis. We have delivered many consecutive quarters of growth, with results at a substantially different level compared to five years ago, reflecting very strong progress.

Milton Maluhy Filho: We have delivered many consecutive quarters of growth, with results at a substantially different level compared to 5 years ago, reflecting very strong progress. Moving on to advisory services and brokerage, revenues increased by 32.5% year over year and by 25.3% in H1 compared to the same period last year. This line is largely composed of fixed income transactions, our approach has been one of strict capital allocation and risk discipline. Many of these transactions are ultimately retained on our balance sheet, what we evaluate is the expected return profile, ensuring that returns remain consistent and aligned with our cost of capital, while also carefully assessing the type of risk we are retaining over the long term, considering both fixed income market pricing dynamics and credit risk. We remain very comfortable with the quality of the assets that have been retained on our balance sheet.

Milton Maluhy Filho: We have delivered many consecutive quarters of growth, with results at a substantially different level compared to five years ago, reflecting very strong progress. Moving on to advisory services and brokerage, revenues increased by 32.5% year-over-year and by 25.3% in H1 compared to the same period last year. This line is largely composed of fixed income transactions, our approach has been one of strict capital allocation and risk discipline. Many of these transactions are ultimately retained on our balance sheet, what we evaluate is the expected return profile, ensuring that returns remain consistent and aligned with our cost of capital, while also carefully assessing the type of risk we are retaining over the long term, considering both fixed income market pricing dynamics and credit risk. We remain very comfortable with the quality of the assets that have been retained on our balance sheet.

Speaker #1: Moving on to advisory services and brokerage, revenues increased by 32.5% year over year, and by 25.3% in the first half compared to the same period last year.

Speaker #1: This line is largely composed of fixed income transactions and our approach has been one of strict capital allocation and risk discipline. As a result, many of these transactions are ultimately retained on our balance sheet, and what we evaluate is the expected return profile, ensuring that returns remain consistent and aligned with our cost of capital, while also carefully assessing the type of risk we are retaining over the long term.

Speaker #1: Considering both fixed income market pricing dynamics and credit risk. Therefore, we remain very comfortable with the quality of the assets that have been retained on our balance sheet.

Milton Maluhy Filho: Moving on to asset management, revenues grew by 7.3% year over year. More importantly, despite not being an exceptional quarter for performance fees, we still achieved 11.0% growth in H1 compared to the same period last year. There are some lines that we deliberately continue to disclose, particularly current accounts for individuals, which declined both in the quarter and year over year to demonstrate that this is precisely the direction we expect. We have been redefining our current account packages in an effort to serve clients more effectively while simultaneously increasing customer lifetime value and reducing friction in our customer relationships.

Speaker #1: Moving on to asset management. Revenues grew by 7.3% year over year. More importantly. Despite not being an exceptional quarter for performance fees. We still achieved 11.0% growth in the first half compared to the same period last year.

Milton Maluhy Filho: Moving on to asset management, revenues grew by 7.3% year-over-year. More importantly, despite not being an exceptional quarter for performance fees, we still achieved 11.0% growth in H1 compared to the same period last year. There are some lines that we deliberately continue to disclose, particularly current accounts for individuals, which declined both in the quarter and year-over-year to demonstrate that this is precisely the direction we expect. We have been redefining our current account packages in an effort to serve clients more effectively while simultaneously increasing customer lifetime value and reducing friction in our customer relationships.

Speaker #1: There are some lines that we deliberately continue to disclose, particularly current accounts for individuals, which declined both in the quarter and year over year, to demonstrate that this is precisely the direction we expect.

Speaker #1: We have been redefining our current account packages in an effort to serve clients more effectively, while simultaneously increasing customer lifetime value and reducing friction in our customer relationships.

Speaker #1: This is why we continue to disclose this line separately, providing visibility into the significant transformation taking place in our revenue mix, with revenues becoming increasingly more sustainable, higher quality, and supportive of greater customer lifetime value.

Milton Maluhy Filho: This is why we continue to disclose this line separately, providing visibility into the significant transformation taking place in our revenue mix, with revenues becoming increasingly more sustainable, higher quality, and supportive of greater customer lifetime value. Revenues from card issuance are closely linked to the risk profile of the portfolio we have been originating. Over the last years, we carried out a very significant de-risking process, and today we operate a portfolio with delinquency levels that are substantially below market averages, roughly half of the system levels, while delivering quality growth and double-digit expansion in the target segments where we have chosen to grow. We are very satisfied with the quality of the results we have achieved. As I mentioned previously, we have observed some moderation in this line throughout the year as a function of economic activity levels.

Speaker #1: Revenues from card issuance are closely linked to the risk profile of the portfolio we have been originating. Over the last years, we carried out a very significant de-risking process, and today we operate a portfolio with delinquency levels that are substantially below market averages, roughly half of the system levels, while delivering quality growth and double-digit expansion in the target segments where we have chosen to grow.

Speaker #1: Therefore, we are very satisfied with the quality of the results we have achieved. That said, as I mentioned previously, we have observed some moderation in this line throughout the year as a function of economic activity levels.

Speaker #1: I will discuss our guidance later on, but this is the line where we are making an adjustment. As I have mentioned in previous quarters, we already saw some risk that performance could trend closer to the lower end of the range.

Milton Maluhy Filho: I will discuss our guidance later on. This is the line where we are making an adjustment. As I have mentioned in previous quarters, we already saw some risk that performance could trend closer to the lower end of the range. We believed it was prudent to revise our full-year growth expectations this quarter. I will provide more details on this adjustment shortly. Turning to credit quality, we delivered another quarter of strong consistency. Looking at Brazil, consolidated NPL 15 to 90 days remained stable and fully in line with the previous quarter. In Brazil, the individual's portfolio also remained stable at approximately 3.0%. In SMEs, we saw a slight increase, fully consistent with what I have been discussing over recent quarters.

Milton Maluhy Filho: I will discuss our guidance later on. This is the line where we are making an adjustment. As I have mentioned in previous quarters, we already saw some risk that performance could trend closer to the lower end of the range. We believed it was prudent to revise our full-year growth expectations this quarter. I will provide more details on this adjustment shortly. Turning to credit quality, we delivered another quarter of strong consistency. Looking at Brazil, consolidated NPL 15-90 days remained stable and fully in line with the previous quarter. In Brazil, the individual's portfolio also remained stable at approximately 3.0%. In SMEs, we saw a slight increase, fully consistent with what I have been discussing over recent quarters.

Speaker #1: Therefore, we believed it was prudent to revise our full-year growth expectations this quarter. I will provide more details on this adjustment shortly. Turning to credit quality, we delivered another quarter of strong consistency.

Speaker #1: Looking at Brazil. Consolidated NPL 15 to 90 days, remained stable, and fully in line with the previous quarter. In Brazil, the individual's portfolio also remained stable.

Speaker #1: At approximately 3.0%. In SMEs. We saw a slight increase. Fully consistent with what I have been discussing over recent quarters. We continue to expect normalization of this indicator, with the gradual stabilization of the grace periods associated with government-backed programs, which, as I previously showed, are highly relevant within our portfolio.

Milton Maluhy Filho: We continue to expect normalization of this indicator with the gradual stabilization of the grace periods associated with government-backed programs, which, as I previously showed, are highly relevant within our portfolio. We are now approaching the end of these grace periods. We should still experience an additional quarter of increases, particularly in NPL over 90 days, which I will discuss in greater detail shortly. Looking at long-term delinquency, the overall indicator remained stable, as did Brazil's indicator this quarter. These are very positive developments for cost of credit, particularly in an environment with household indebtedness increasing, household leverage rising, and interest rates remaining restrictive. Even under these conditions, we have been able to navigate the cycle with a high degree of discipline and consistency. Looking specifically at Brazil, delinquency in the individual's portfolio increased slightly by 10 basis points. We have absolutely no concerns regarding this portfolio.

Speaker #1: We are now approaching the end of these grace periods. We should still experience an additional quarter of increases, particularly in NPLs over 90 days.

Speaker #1: Which I will discuss in greater detail shortly. Looking at long-term delinquency. The overall indicator remained stable, as did Brazil's indicator this quarter. These are very positive developments for cost of credit, particularly in an environment with household indebtedness increasing, household leverage rising, and interest rates remaining restrictive.

Speaker #1: Even under these conditions, we have been able to navigate the cycle with a high degree of discipline and consistency. Looking specifically at Brazil. Delinquency in the individual's portfolio increased slightly, by 10 basis points.

Speaker #1: But we have absolutely no concerns regarding this portfolio. I also wanted to provide greater transparency regarding the impact of the desenrola program. We had 371,000 clients impacted and 1.1 billion riais in renegotiated loans, but the effect on our indicators was immaterial.

Milton Maluhy Filho: I also wanted to provide greater transparency regarding the impact of the Desenrola program. We had 371,000 clients impacted and BRL 1.1 billion in renegotiated loans. The effect on our indicators was immaterial. To put this into perspective, the impact on cost of credit was BRL 60 million during the quarter, while the impact on the delinquency indicator was only 2 basis points. Why am I highlighting this? We achieved a 12% market share in this program. When the program was launched, our expectation was to operate with approximately 10% market share. We performed somewhat better than expected, although the target customer profile, consisting of individuals earning up to five minimum wages, is not necessarily the primary focus of our portfolios. The key message, however, is that our risk management framework continues to perform with a very high level of quality, regardless of any specific program.

Speaker #1: To put this into perspective, the impact on cost of credit was 60 million riais during the quarter, while the impact on the delinquency indicator was only 2 basis points.

Speaker #1: Why am I highlighting this? Because we achieved a 12% market share in this program. When the program was launched, our expectation was to operate with approximately 10% market share.

Speaker #1: We performed somewhat better than expected, although the target customer profile, consisting of individuals earning up to 5 minimum wages, is not necessarily the primary focus of our portfolios.

Speaker #1: The key message, however, is that our risk management framework continues to perform with a very high level of quality, regardless of any specific program.

Speaker #1: In this particular case, the effect on our indicators. Was immaterial. This is the indicator I mentioned earlier. With SMEs increasing from 1.9% to 2.0%.

Milton Maluhy Filho: In this particular case, the effect on our indicators was immaterial. This is the indicator I mentioned earlier. With SMEs increasing from 1.9% to 2.0%, we are still operating at levels that are significantly below those observed in the past when this indicator ranged between 2.3% and 2.5%, that is only natural. However, there is a mechanical effect related to the expiration of grace periods as government-backed programs mature. Previously, we benefited from these grace periods as the denominator grew significantly without any impact on the numerator. As these grace periods begin to expire, we naturally see this increase in the indicator. Our best estimate is that this indicator should increase by another 10 basis points next quarter, reaching approximately 2.1%, which remains well below levels observed not so long ago, such as in September 2024.

Speaker #1: We are still operating at levels that are significantly below those observed in the past. When this indicator ranged between 2.3% and 2.5%. And that is only natural.

Speaker #1: However, there is a mechanical effect related to the expiration of grace periods as government-backed programs mature. Previously, we benefited from these grace periods. As the denominator grew significantly without any impact on the numerator.

Speaker #1: As these grace periods begin to expire, we naturally see this increase in the indicator. Our best estimate is that this indicator should increase by another 10 basis points next quarter.

Speaker #1: Reaching approximately 2.1%. Which remains well below levels observed not so long ago. Such as in September 2024. It is important to remember that the market is dynamic, but our current expectation is for this indicator to stabilize at around 2.1% over the coming quarters.

Milton Maluhy Filho: It is important to remember that the market is dynamic. Our current expectation is for this indicator to stabilize at around 2.1% over the coming quarters. Once again, this reinforces the fact that we are looking at a mechanical effect and not a source of concern despite all the challenges we have been observing in the market. Therefore, delinquency indicators continue to provide very positive news. Regarding the portfolio by stages, I do not have any major highlights here. Stage 2 and Stage 3 portfolios remain broadly in line with expectations. However, I would like to draw your attention to the Stage 2 coverage ratio, particularly the reduction observed this quarter in the company's portfolio. It is important to note that we do not manage the business by stage classification. Our management approach is based on expected loss.

Speaker #1: Once again, this reinforces the fact that we are looking at a mechanical effect and not a source of concern, despite all the challenges we have been observing in the market.

Speaker #1: Therefore, delinquency indicators continue to provide very positive news. Regarding the portfolio by stages, I do not have any major highlights here. Stage 2 and Stage 3 portfolios remain broadly in line with expectations.

Speaker #1: However, I would like to draw your attention to the Stage 2 coverage ratio. Particularly the reduction observed this quarter in the company's portfolio. It is important to note that we do not manage the business by stage classification.

Speaker #1: Our management approach is based on expected loss. Therefore, if you compare the sum of short-term delinquency, NPL 15 to 90 days, plus NPL over 90 days, with the share of the portfolio classified in each stage, you will notice that stage allocations are substantially higher.

Milton Maluhy Filho: Therefore, if you compare the sum of short-term delinquency, NPL 15 to 90 days, plus NPL over 90 days with the share of the portfolio classified in each stage, you will notice that stage allocations are substantially higher. What happens is that, particularly in wholesale, when there are migrations from Stage 2 to Stage 3, or from Stage 1 to Stage 2, these effects become visible. This quarter, we experienced migrations of clients from Stage 2 to Stage 3. Typically, clients leave Stage 2 with a relatively high level of coverage when they are ready to migrate. This affects the overall coverage ratio. Once again, this is essentially a mechanical effect that is fully accounted for in our projections and in our cost of credit, which I will discuss shortly. There is no specific issue behind this movement.

Milton Maluhy Filho: Therefore, if you compare the sum of short-term delinquency, NPL 15-90 days, plus NPL over 90 days with the share of the portfolio classified in each stage, you will notice that stage allocations are substantially higher. What happens is that, particularly in wholesale, when there are migrations from Stage 2 to Stage 3, or from Stage 1 to Stage 2, these effects become visible. This quarter, we experienced migrations of clients from Stage 2 to Stage 3. Typically, clients leave Stage 2 with a relatively high level of coverage when they are ready to migrate. This affects the overall coverage ratio. Once again, this is essentially a mechanical effect that is fully accounted for in our projections and in our cost of credit, which I will discuss shortly. There is no specific issue behind this movement.

Speaker #1: What happens is that. Particularly in wholesale, when there are migrations from Stage 2 to Stage 3, or from Stage 1 to Stage 2, these effects become visible.

Speaker #1: This quarter, we experienced migrations of clients from Stage 2 to Stage 3. Typically, clients leave Stage 2 with a relatively high level of coverage when they are ready to migrate.

Speaker #1: And this affects the overall coverage ratio. Once again, this is essentially a mechanical effect that is fully accounted for in our projections and in our cost of credit.

Speaker #1: Which I will discuss shortly. There is no specific issue behind this movement. In the MD&A, you will find the breakdown by retail and wholesale segments.

Milton Maluhy Filho: In the MD&A, you will find the breakdown by retail and wholesale segments. This remains a purely mechanical effect with no cause for concern. It simply reflects the natural migration of clients between stages, all of whom already had adequate provisioning levels. Turning to cost of credit, you can see remarkable stability in this series from Q1 2025 through today, with cost of credit running at 2.7% of the portfolio throughout the period. This is an impressive level of stability. Naturally, nominal figures increase as the portfolio grows, which is why it is important to compare nominal growth in credit costs against the growth of the portfolio itself. That is exactly what we have observed. Cost of credit recorded only a slight increase, reaching BRL 10.1 billion. As I mentioned earlier, the impact of the Desenrola program was immaterial both overall and during the quarter.

Speaker #1: But this remains a purely mechanical effect with no cause for concern. It simply reflects the natural migration of clients between stages. All of whom already had adequate provisioning levels.

Speaker #1: Turning to cost of credit. You can see remarkable stability in this series from the first quarter of 2025 through today. With cost of credit running at 2.7% of the portfolio throughout the period.

Speaker #1: This is an impressive level of stability. Naturally, nominal figures increase as the portfolio grows, which is why it is important to compare nominal growth in credit costs against the growth of the portfolio itself.

Speaker #1: That is exactly what we have observed. Cost of credit recorded only a slight increase, reaching 10.1 billion riais. As I mentioned earlier, the impact of the desenrola program was immaterial both overall and during the quarter.

Speaker #1: Moving on to the renegotiated portfolio. It continues to operate at very comfortable and appropriate levels, although there are some specific effects worth mentioning. I had previously indicated that at some point, the nominal figures would naturally tend to increase.

Milton Maluhy Filho: Moving on to the renegotiated portfolio. It continues to operate at very comfortable and appropriate levels, although there are some specific effects worth mentioning. I had previously indicated that at some point, the nominal figures would naturally tend to increase. This is expected given the significant de-risking process we have carried out over recent years. However, we also have specific one-off effects, such as the inclusion of the Desenrola portfolio. Out-of-court restructurings and older restructuring plans that have recently been approved are also included in these figures, among other items. Therefore, this increase is driven by specific and isolated factors. What matters most is the relative indicator, which remains very well-behaved and once again demonstrates the strength of our portfolios. Turning to non-interest expenses, the news is very positive.

Speaker #1: This is expected given the significant de-risking process we have carried out over recent years. However, we also have specific one-off effects, such as the inclusion of the desenrola portfolio.

Speaker #1: Out of court restructurings and older restructuring plans that have recently been approved are also included in these figures, among other items. Therefore, this increase is driven by specific and isolated factors.

Speaker #1: What matters most is the relative indicator. Which remains very well behaved and once again demonstrates the strength of our portfolios. Turning to non-interest expenses.

Speaker #1: The news is very positive. Commercial and administrative expenses declined by 0.5% year over year, and increased 3.2% in the first half of 2026 compared with the first half of 2025, remaining below both inflation and collective bargaining adjustments.

Milton Maluhy Filho: Commercial and administrative expenses declined by 0.5% year over year and increased 3.2% in H1 2026 compared with H1 2025, remaining below both inflation and collective bargaining adjustments. Looking at total Brazil expenses, growth reached 3.1% year over year and 4.1% in H1 2026 compared with the same period last year. This once again demonstrates our cost discipline across the organization and the meaningful progress we have made, particularly in those segments where we needed to improve efficiency in order to become increasingly competitive. This is a direct result of our management strategy, and we can certainly discuss it further during the Q&A session. Overall, I am very pleased with the progress we have achieved on this agenda. As a result of this strategy, the efficiency ratio reached 35.5% in Brazil in Q2 and 37.4% on a consolidated basis.

Milton Maluhy Filho: Commercial and administrative expenses declined by 0.5% year-over-year and increased 3.2% in H1 2026 compared with H1 2025, remaining below both inflation and collective bargaining adjustments. Looking at total Brazil expenses, growth reached 3.1% year-over-year and 4.1% in H1 2026 compared with the same period last year. This once again demonstrates our cost discipline across the organization and the meaningful progress we have made, particularly in those segments where we needed to improve efficiency in order to become increasingly competitive. This is a direct result of our management strategy, and we can certainly discuss it further during the Q&A session. Overall, I am very pleased with the progress we have achieved on this agenda. As a result of this strategy, the efficiency ratio reached 35.5% in Brazil in Q2 and 37.4% on a consolidated basis.

Speaker #1: Looking at total Brazil expenses, growth reached 3.1% year over year, and 4.1% in the first half of 2026 compared with the same period last year.

Speaker #1: This once again demonstrates our cost discipline across the organization and the meaningful progress we have made. Particularly in those segments where we needed to improve efficiency.

Speaker #1: In order to become increasingly competitive. This is a direct result of our management strategy. And we can certainly discuss it further during the Q&A session.

Speaker #1: Overall, I am very pleased with the progress we have achieved on this agenda. As a result of this strategy, the efficiency ratio reached 35.5% in Brazil in the second quarter and 37.4% on a consolidated basis.

Speaker #1: Looking at the first half comparison, we continue to make progress, improving from 35.7% in the first half of 2025 to 35.2% in the first half of 2026 in Brazil, and from 37.5% to 37.3% on a consolidated basis.

Milton Maluhy Filho: Looking at the H1 comparison, we continue to make progress, improving from 35.7% in H1 2025 to 35.2% in H1 2026 in Brazil and from 37.5% to 37.3% on a consolidated basis. I am very satisfied with the efficiency ratio of the institution as a whole. It is also important to note that all expenses are included in this metric. There are no additional expenses outside the figures presented here, which further reinforces the strength and quality of the results we are delivering. All of this ultimately reflects our capital generation capacity. We generated 0.8% through earnings retention during the period. We had a 0.3% reduction related to dividends and interest on capital provisions, and a further 0.1% reduction from risk-weighted assets.

Speaker #1: Therefore, I am very satisfied with the efficiency ratio of the institution as a whole. It is also important to note that all expenses are included in this metric.

Speaker #1: There are no additional expenses outside the figures presented here, which further reinforces the strength and quality of the results we are delivering. All of this ultimately reflects our capital generation capacity.

Speaker #1: We generated 0.8% through earnings retention during the period. We had a 0.3% reduction related to dividends and interest on capital provisions, and a further 0.1% reduction from risk-weighted assets.

Speaker #1: As a result, we ended the quarter with a common equity tier 1 ratio of 12.3%, a very strong and solid capital position, with further growth expected, which should allow us to have our traditional discussion regarding additional dividend distributions at the beginning of the following year.

Milton Maluhy Filho: As a result, we ended the quarter with a common equity Tier 1 ratio of 12.3%, a very strong and solid capital position with further growth expected, which should allow us to have our traditional discussion regarding additional dividend distributions at the beginning of the following year. This clearly demonstrates the strength of our capital generation capacity. We also report additional Tier 1 capital at 1.5%. It is worth noting that the actual figure is 1.7%, but regulatory limits restrict the amount that can be recognized, which is why we present 1.5% here. This results in a very solid Tier 1 capital ratio and reinforces the strength of our capital generation base. Finally, regarding my comments on guidance, I have two observations to make. We maintained the previously disclosed guidance ranges, including loan portfolio growth, NII with clients, NII with the market, cost of credit, and non-interest expenses.

Speaker #1: This clearly demonstrates the strength of our capital generation capacity. We also report additional tier 1 capital at 1.5%. It is worth noting that the actual figure is 1.7%.

Speaker #1: But regulatory limits restrict the amount that can be recognized, which is why we present 1.5% here. This results in a very solid tier 1 capital ratio.

Speaker #1: And reinforces the strength of our capital generation base. Finally, regarding my comments on guidance, I have two observations to make. We maintained the previously disclosed guidance ranges, including loan portfolio growth, NII with clients, NII with the market, cost of credit, and non-interest expenses.

Speaker #1: The only change we made was to commissions and fees, and to results from insurance, which, as I mentioned earlier, is closely linked to the level of economic activity.

Milton Maluhy Filho: The only change we made was to commissions and fees and to results from insurance, which as I mentioned earlier, is closely linked to the level of economic activity. We revised the expected growth range to between 2% and 5%, whereas at the beginning of the year, we expected growth between 5% and 9%. We are making this adjustment to better reflect the trends we have been observing. If we see positive surprises in economic activity or attractive market windows, we will naturally seek to capitalize on them in the best possible way. We believe that making this adjustment is the most prudent course of action at this point. The second comment I would like to make is not a change in guidance itself, but rather a comment on the position of the guidance.

Speaker #1: We revised the expected growth range to between 2% and 5%, whereas at the beginning of the year we expected growth between 5% and 9%.

Speaker #1: We are making this adjustment to better reflect the trends we have been observing. If we see positive surprises in economic activity or attractive market windows, we will naturally seek to capitalize on them in the best possible way.

Speaker #1: However, we believe that making this adjustment is the most prudent course of action at this point. The second comment I would like to make is not a change in guidance itself, but rather a comment on the position of the guidance.

Speaker #1: If you recalculate the implied results, I would ask you to consider the effective tax rate at the lower end of the range, which reflects our best current estimate.

Milton Maluhy Filho: If you recalculate the implied results, I would ask you to consider the effective tax rate at the lower end of the range, which reflects our best current estimate. If you run the math based on those assumptions, you will see that the implied bottom line remains unchanged. Despite the revision to fee income and insurance results, assuming the effective tax rate remains closer to the lower end of the range, the bottom-line outlook is effectively the same. This once again demonstrates our ability to provide visibility and deliver consistent earnings, even if the contribution by line item ends up differing from our original assumptions. We still have two quarters ahead of us with important challenges to navigate. The year is far from over, but we believe that we are very well-positioned to deliver on our objectives over the next two quarters.

Speaker #1: If you run the math based on those assumptions, you will see that the implied bottom line remains unchanged. Despite the revision to fee income and insurance results, assuming the effective tax rate remains closer to the lower end of the range, the bottom line outlook is effectively the same.

Speaker #1: This once again demonstrates our ability to provide visibility and deliver consistent earnings, even if the contribution by line item ends up differing from our original assumptions.

Speaker #1: We still have two quarters ahead of us, with important challenges to navigate. The year is far from over, but we believe that we are very well positioned to deliver on our objectives over the next two quarters.

Speaker #1: As always, should anything change, I will communicate it to you in a timely manner. Well, everyone, as I stated earlier, these are very solid results.

Milton Maluhy Filho: As always, should anything change, I will communicate it to you in a timely manner. Well, everyone, as I stated earlier, these are very solid results. We delivered quality performance across all lines. I believe it is extremely important to look at the bank's balance sheet and just as importantly, to understand where earnings are being generated. Above all, what matters is discipline and consistency, allocating capital effectively, generating appropriate returns on allocated capital, deepening primary banking relationships with our clients, increasing engagement, strengthening relationships, and managing a transformation process that is occurring at a pace we have never experienced before, whether in terms of cultural transformation or digital transformation. We have been able to execute and coordinate all these changes simultaneously.

Speaker #1: We delivered quality performance across all lines. I believe it is extremely important to look at the bank's balance sheet and just as importantly, to understand where earnings are being generated.

Speaker #1: Above all, what matters is discipline and consistency. Allocating capital effectively, generating appropriate returns on allocated capital, deepening primary banking relationships with our clients, increasing engagement, strengthening relationships, and managing a transformation process that is occurring at a pace we have never experienced before, whether in terms of cultural transformation or digital transformation.

Speaker #1: We have been able to execute and coordinate all these changes simultaneously. These are structural changes to our business models, carried out with a high degree of discipline, strong execution focus, and, most importantly, with a realistic understanding of the many challenges ahead.

Milton Maluhy Filho: These are structural changes to our business models, carried out with a high degree of discipline, strong execution focus, and most importantly, with a realistic understanding of the many challenges ahead. Both the macroeconomic and microeconomic environments require close attention. The level of indebtedness among both companies and households in a restrictive interest rate environment requires caution. We have been navigating this environment successfully, always maintaining a long-term perspective. Thank you once again for your time and continued trust. I will now join Gabriel and Gustavo for our traditional Q&A session. See you shortly.

Speaker #1: Both the macroeconomic and microeconomic environments require close attention. The level of indebtedness among both companies and households in a restrictive interest rate environment requires caution.

Speaker #1: Nevertheless, we have been navigating this environment successfully, always maintaining a long-term perspective. Thank you once again for your time and continued trust. I will now join Gabriel and Gustavo for our traditional Q&A session.

Speaker #1: See you shortly.

Speaker #2: Olá. Estamos de volta agora, direto do nosso estúdio.

Gabriel Amado de Moura: Hello. Welcome once again from our studio for the Q&A session. We are going to start. Beforehand, this is a two language session. We are going to answer the questions in the language that they are made. Should you need any support, our platform has the options for the audio in Portuguese, English, or the original audio without translation. You can submit your questions via WhatsApp. First question. It comes from Bernardo Guttmann, XP Investimentos. The floor is yours. Hi, good morning. Good morning, everyone. Thank you for the opportunity for asking a question, and congratulations on the results. Question about the margin with the clients. The quarter was good without the offenders of the Q1, but in the accumulator of the semester, the line is a bit below 5% against a guidance that starts at 5% and goes to 9%. The guidance was kept.

Gustavo Lopes Rodrigues: Hello. Welcome once again from our studio for the Q&A session. We are going to start. Beforehand, this is a two language session. We are going to answer the questions in the language that they are made. Should you need any support, our platform has the options for the audio in Portuguese, English, or the original audio without translation. You can submit your questions via WhatsApp. First question. It comes from Bernardo Guttmann, XP Investimentos. The floor is yours.

Speaker #3: Welcome once again from our studio for the Q&A session. We're going to start. Beforehand, this is a two-language session. We're going to answer the questions in the language that they're asked.

Speaker #3: Should you need any support, our platform offers the option for audio in Portuguese, English, or the original audio without translation. You can submit your questions via WhatsApp.

Speaker #3: First question comes from Bernardo Guttmann, XB Investments. The floor is yours. Hi, good morning. Good morning, everyone. Thank you for the opportunity to ask a question.

Bernardo Guttmann: Hi, good morning. Good morning, everyone. Thank you for the opportunity for asking a question, and congratulations on the results. Question about the margin with the clients. The quarter was good without the offenders of the Q1, but in the accumulator of the semester, the line is a bit below 5% against a guidance that starts at 5% and goes to 9%. The guidance was kept. I want to understand where the acceleration is coming from in the H2, more volume, more mix, margin of liabilities, or any relevant own capital in this account. The SELIC rate and the cycle turning, how do you foresee the behavior of the margin of liabilities from now on?

Speaker #3: And congratulations on the results. Question about the margin with the clients. The quarter was good, without the offenders of the first quarter, but any accumulated of the semester, the line is a bit below 5%.

Speaker #3: Against guidance that starts at 5 and goes to 9. The guidance was kept. I want to understand where the acceleration is coming from.

Gabriel Amado de Moura: I want to understand where the acceleration is coming from in the H2, more volume, more mix, margin of liabilities, or any relevant own capital in this account. The Selic rate and the cycle turning, how do you foresee the behavior of the margin of liabilities from now on? Thank you, Bernardo. Great to see you. Thank you for the initial words. It is a good topic, so we can start the discussion. Your question is more specific about the guidance, but I want to talk about the specific growth of the margin. We see the portfolio growing about 10%, maybe a bit below. It should, in the next quarters, have a bit of a reduction, but it is still above the midpoint of the guidance. It should stay there. Due to the dynamics of growth, it should be in a higher threshold.

Speaker #3: And the second semester, more volume, more mix, margin of liabilities, or any relevant own capital in this account. And does the liquid rate, and the cycle turning, tell you foresee the behavior of the margin of liabilities from now on?

Speaker #3: Thank you, Bernardo. Great to see you. Thank you for the initial words. It's a good topic, so we can start the discussion. Your question is more specific about the guidance, but I want to talk about the specific growth of the margin.

Milton Maluhy Filho: Thank you, Bernardo. Great to see you. Thank you for the initial words. It is a good topic, so we can start the discussion. Your question is more specific about the guidance, but I want to talk about the specific growth of the margin. We see the portfolio growing about 10%, maybe a bit below. It should, in the next quarters, have a bit of a reduction, but it is still above the midpoint of the guidance. It should stay there. Due to the dynamics of growth, it should be in a higher threshold. There is a Colombia operation that leaves now in July, BRL 10 billion of credit. That allows us to grow in the previous base. We are talking about a delta growth.

Speaker #3: We see the portfolio growing. About 10%, maybe a bit below. It should, in the next quarters, have a bit of a reduction, but it's still above the midpoint of the guidance.

Speaker #3: It should stay there. And due to the dynamics of growth, I should be in a higher threshold. There's a Columbia operation that leaves now in July, $10 billion of credit.

Gabriel Amado de Moura: There is a Colombia operation that leaves now in July, BRL 10 billion of credit. That allows us to grow in the previous base. We are talking about a delta growth. Second effect, the margin as we see it today, it is growing below the portfolio. Some ask, why is the margin growing below? The explanation is the same one as the next quarters. First, when we look at the portfolio, we see the margin of assets of credit growing aligned with the portfolio. When we open the margin, we have the credit assets, we have liabilities, we have working capital, and we have structured operations. First relevant information for you is that the margin of assets is growing in line with the average results. In the margin of liabilities, we had in the previous years an important acceleration with the interest rates hike and an increase also in the performance.

Speaker #3: That allows us to grow in the previous base, and we're talking about a delta growth. Second effect. The margin as we see it today, it's growing below the portfolio.

Milton Maluhy Filho: Second effect, the margin as we see it today, it is growing below the portfolio. Some ask, why is the margin growing below? The explanation is the same one as the next quarters. First, when we look at the portfolio, we see the margin of assets of credit growing aligned with the portfolio. When we open the margin, we have the credit assets, we have liabilities, we have working capital, and we have structured operations. First relevant information for you is that the margin of assets is growing in line with the average results. In the margin of liabilities, we had in the previous years an important acceleration with the interest rates hike and an increase also in the performance.

Speaker #3: Some ask, why is the margin growing below the explanation is the same one as the next quarters? First, when we look at the portfolio, we see the margin of assets of credit growing aligned with the portfolio.

Speaker #3: So when we open the margin, we have the credit assets, we have liabilities, we have working capital, and we have structured operations. First relevant information for you is that the margin of assets is growing aligned with the average results.

Speaker #3: And the margin of liabilities, we had in the previous years, an important acceleration with the interest rates hike, and an increase also in the performance.

Speaker #3: We see a strong activity. So we have a relevant growth, especially last year in the liability margin. And the price which is what we tend to analyze along with the balance.

Gabriel Amado de Moura: We see a strong activity. We have a relevant growth, especially last year in the liability margin. The price, which is what we tend to analyze along with the balance. In this quarter, we have the base effect with the assets when we compare it with the Q1 of last year, we had the full capital. Last year, we did an anticipation of the dividend, we got into the H1 with a capital with a lower threshold. That is the effect on the working capital. Fourth effect that really explains the volatility of the margin are the structured operations. Latam does not really bring a lot of volatility. There is an exchange rate effect on the results. The structured of the wholesale, they have volatility effects.

Milton Maluhy Filho: We see a strong activity. We have a relevant growth, especially last year in the liability margin. The price, which is what we tend to analyze along with the balance. In this quarter, we have the base effect with the assets when we compare it with the Q1 of last year, we had the full capital. Last year, we did an anticipation of the dividend, we got into the H1 with a capital with a lower threshold. That is the effect on the working capital. Fourth effect that really explains the volatility of the margin are the structured operations. Latam does not really bring a lot of volatility. There is an exchange rate effect on the results. The structured of the wholesale, they have volatility effects.

Speaker #3: In this quarter, we have the base effect where the assets, when we compare it with the previous with the first quarter, the first quarter of last year, we had the full capital, and last year we did an anticipation of the dividends, so we got into the first semester with a capital with a lower threshold.

Speaker #3: That's the effect on the working capital. The fourth effect that really explains the volatility of the margin are the structured operations. A lot of them don't really bring a lot of volatility.

Speaker #3: There is an exchange rate effect on the results, but the structured of the wholesale they have volatility effects. So when we look at the two quarters, the expectation is that the range still comprises our best opinion of projections of course it depends on the activity and a series of factors nonetheless.

Gabriel Amado de Moura: When we look at the two quarters, the expectation is that the range still comprises our best opinion of projections. Of course, it depends on the activity and a series of factors. Nonetheless, we can see some volatility in the margin in Q3, Q4, but due to the seasonality of the structured operations of the wholesale, that tends to be stronger in Q4. When we do the projection of the margin, everything else constant, we believe that the current range comprises, it's a range, it's not a point, it comprises that. When we see the effect of the interest rate, it had an effect of rate itself when we look at the implicit working capital in regards to the previous quarter.

Milton Maluhy Filho: When we look at the two quarters, the expectation is that the range still comprises our best opinion of projections. Of course, it depends on the activity and a series of factors. Nonetheless, we can see some volatility in the margin in Q3, Q4, but due to the seasonality of the structured operations of the wholesale, that tends to be stronger in Q4. When we do the projection of the margin, everything else constant, we believe that the current range comprises, it's a range, it's not a point, it comprises that. When we see the effect of the interest rate, it had an effect of rate itself when we look at the implicit working capital in regards to the previous quarter.

Speaker #3: We can see some volatility in the margin in the third, fourth quarter, but due to the seasonality of the structured operations of the wholesale, that tends to be stronger in the fourth quarter.

Speaker #3: So when we do the projection of the margin, everything else constant, we believe that the current range comprises it's a range, it's not a point, it comprises that.

Speaker #3: So when we see the effect of the interest rate, it had an effect of rate itself when we look at the implicit working capital in regards to the previous quarter, but when we normalize the wrap effects and also in this quarter, the working capital had a lower effect which is selling the real estate that stays in the working capital.

Gabriel Amado de Moura: When we normalize the RAP effects, and also in this quarter, the working capital had a lower effect, which is selling the real estate that stays in the working capital. We see the rate of the working capital being aligned with the previous quarter. Remember, we do the long-term hedge of these operations, the liability, and the working capital. Even in a cycle of interest rate, the pass-through to the margin is not automatic. There is a temporal gap as the hedges are done for the longer vertices. We depend on the activity because the activity of a liability work together. We have a cash pressure, stronger, and also the individuals. The efficiency, they pressure the liabilities, they grow the balance, and the margin will depend on the dynamic of interest rates, which depend on internal, external, and amount of factors.

Milton Maluhy Filho: When we normalize the RAP effects, and also in this quarter, the working capital had a lower effect, which is selling the real estate that stays in the working capital. We see the rate of the working capital being aligned with the previous quarter. Remember, we do the long-term hedge of these operations, the liability, and the working capital. Even in a cycle of interest rate, the pass-through to the margin is not automatic. There is a temporal gap as the hedges are done for the longer vertices. We depend on the activity because the activity of a liability work together. We have a cash pressure, stronger, and also the individuals.

Speaker #3: We see the rate of the working capital being aligned with the previous quarter. And remember, we do the long-term hedge of these operations. The liability and the working capital.

Speaker #3: Even in a cycle of interest rates, the pass-through to the margin is not automatic. There is a temporal gap as the hedges are done for the longer vertices.

Speaker #3: So we depend on the activity because the activity of and liability work together. We have a cash pressure stronger and also the individuals. The efficiency they pressure the liabilities.

Milton Maluhy Filho: The efficiency, they pressure the liabilities, they grow the balance, and the margin will depend on the dynamic of interest rates, which depend on internal, external, and amount of factors. We have Everything depending on the scenario inflation, the interest rates on the United States. We can have a clear vision.

Speaker #3: They grow the balance and the margin will depend on the dynamic of interest rates, which depend on internal, external, and amount of factors. We have everything depending on the scenario, inflation, the interest rates on the United States.

Gabriel Amado de Moura: We have Everything depending on the scenario inflation, the interest rates on the United States. We can have a clear vision. Next question, Gustavo Schroden from Citibank. Good morning, everyone. Thank you. Congratulations on the results. Quite solid. I apologize, and I'm going to insist on the issue of the question of Bernardo, but I'm going to try and bring it towards the optics of growing the portfolio. If we analyze the bank, it has a few lines, and it's focused on the private payroll loans, small companies. I wanted to understand what is the sustainability of this level of growth in these three main vectors of growth, the small and medium-sized companies. Always exposed to a higher interest rate that we should have, even though we are expecting cuts, we are still going to have a Selic rate higher, macro scenario challenging.

Speaker #3: So we can have a clear vision. Next question. Gustavo Schroden from Citibank. What is your good morning, everyone. Thank you. Congratulations on the results.

Gustavo Lopes Rodrigues: Next question, Gustavo Schroden from Citibank.

Gustavo Schroden: Good morning, everyone. Thank you. Congratulations on the results. Quite solid. I apologize, and I'm going to insist on the issue of the question of Bernardo, but I'm going to try and bring it towards the optics of growing the portfolio. If we analyze the bank, it has a few lines, and it's focused on the private payroll loans, small companies. I wanted to understand what is the sustainability of this level of growth in these three main vectors of growth, the small and medium-sized companies. Always exposed to a higher interest rate that we should have, even though we are expecting cuts, we are still going to have a SELIC rate higher, macro scenario challenging.

Speaker #3: Quite solid. I apologize and I'm going to insist on the issue of the question of Bernardo. But I'm going to try and bring it towards the optics of growing the portfolio.

Speaker #3: If we analyze the bank, it has a few lines and it's focused on the private payroll, loans, small companies, so I wanted to understand what is the sustainability of this level of growth in these three main vectors of growth, the small and medium-sized companies, always exposed to a higher interest rate, that we should have, even though we are expecting cuts, we are still going to have a Selig rate higher, macro scenario challenging the private payroll loan consignado is a product that has delinquency pressures there is a gap in the interest rates, so we need to understand the size of this market.

Gabriel Amado de Moura: The private payroll loan, consignado, is a product that has delinquency pressures. There is a cap in the interest rates. We need to understand the size of this market. Is it possible to keep this level of growth for the next 12 months? And the real estate, when you have higher interest rates. I really want to understand, what is the dynamic of the portfolio from now on to sustain this growth of NII that is more pure of credit and of follow-ups on the structured operations. Maybe we should expect a contribution for the semester, for the end of the year. If you can clarify, what is the dynamic of the dividends that come from the quasi-equity operations that you have? They are linear. Do we have a seasonality herein? Because it's more concentrated towards the end of the year.

Gustavo Schroden: The private payroll loan, Consignado, is a product that has delinquency pressures. There is a cap in the interest rates. We need to understand the size of this market. Is it possible to keep this level of growth for the next 12 months? And the real estate, when you have higher interest rates. I really want to understand, what is the dynamic of the portfolio from now on to sustain this growth of NII that is more pure of credit and of follow-ups on the structured operations. Maybe we should expect a contribution for the semester, for the end of the year. If you can clarify, what is the dynamic of the dividends that come from the quasi-equity operations that you have? They are linear. Do we have a seasonality herein? Because it's more concentrated towards the end of the year. We wanted to understand those nuances.

Speaker #3: Is it possible to keep this level of growth for the next 12 months? And the real estate. When you have higher interest rates. So I really want to understand what is the dynamic of the portfolio from now on.

Speaker #3: To sustain this growth of NII that is more pure of credit and of follow-up on the structured operations. Maybe we should expect a contribution for the semester, for the end of the year.

Speaker #3: So if you can clarify, what is the dynamic of the dividends that come from the quasi-equity operations that you have? They are linear. Do we have a seasonality?

Speaker #3: Herein, because it's more concentrated towards the end of the year. So we wanted to understand those nuances. Thank you, Gustavo. Thank you for the question.

Gabriel Amado de Moura: We wanted to understand those nuances. Thank you, Gustavo. Thank you for the question. Great to see you. Let me try and bring forth a few relevant events. The SMEs. We managed to grow with quality, with a great dynamics, healthy of risk management, and with a clear strategy for many quarters to grow in the government programs. It's a guaranteed portfolio, and we've decreased in the government programs. Well, with the better ratings customers, we build a portfolio with them all throughout the years. It's a portfolio that has performed regardless of the challenging context and the cost of credit and results in a profitability level are being delivered very solidly for a segment. Government still helps to withhold the delinquency at a lower threshold, but even the clients that are not in the government products, we've been growing with quality.

Milton Maluhy Filho: Thank you, Gustavo. Thank you for the question. Great to see you. Let me try and bring forth a few relevant events. The SMEs. We managed to grow with quality, with a great dynamics, healthy of risk management, and with a clear strategy for many quarters to grow in the government programs. It's a guaranteed portfolio, and we've decreased in the government programs. Well, with the better ratings customers, we build a portfolio with them all throughout the years. It's a portfolio that has performed regardless of the challenging context and the cost of credit and results in a profitability level are being delivered very solidly for a segment. Government still helps to withhold the delinquency at a lower threshold, but even the clients that are not in the government products, we've been growing with quality.

Speaker #3: Great to see you. Let me try and bring forth a few relevant events. The SMEs. We managed to grow. Grow with quality. With a great dynamics.

Speaker #3: Healthy of risk management. And with a clear strategy for many quarters to grow. In the government programs. It's a guaranteed portfolio. And we've decreased in the government programs with the better ratings customers we build a portfolio with them all throughout the years.

Speaker #3: It's a portfolio that has performed regardless of the challenging context and the cost of credit, and results in a profitability level that is being delivered very solidly for the segment.

Speaker #3: So government still helps to withhold the delinquency at a lower threshold. But even the clients that are not in the government products—we’ve been growing with quality.

Speaker #3: I've explained in the presentation about the delays I want to reinforce. We've seen stability in these delays in the SMEs, mainly because of the mechanical issues with the deadlines.

Gabriel Amado de Moura: I've explained in a presentation about the delays. I want to reinforce, we've seen a stability in these delays in the SMEs, mainly because of the mechanical issues of the deadlines. Since they are tending to zero, we have a mechanical growth of NPL. The guarantees are exercised depending on the program, depending 90 days, maybe 180 days. They go through delays before you execute the guarantee. There should be another 10 basis points of growth. Stability, well, given the information that we have right now, the scenario is dynamic. If we have deterioration, we're going to bring more information. The private payroll loan. In the previous product, you had specific agreements, BRL 40 billion market. We had 30% of the market, BRL 12 billion of portfolio.

Milton Maluhy Filho: I've explained in a presentation about the delays. I want to reinforce, we've seen a stability in these delays in the SMEs, mainly because of the mechanical issues of the deadlines. Since they are tending to zero, we have a mechanical growth of NPL. The guarantees are exercised depending on the program, depending 90 days, maybe 180 days. They go through delays before you execute the guarantee. There should be another 10 basis points of growth. Stability, well, given the information that we have right now, the scenario is dynamic. If we have deterioration, we're going to bring more information. The private payroll loan. In the previous product, you had specific agreements, BRL 40 billion market. We had 30% of the market, BRL 12 billion of portfolio.

Speaker #3: Since they are 10 to 0, we have a mechanical growth of NPL. The guarantees are exercised depending on the program—sometimes after 90 days, maybe 180 days.

Speaker #3: So they go through delays before you execute the guarantee. So there should be another 10 bits of growth. Then stability. Well, given the information that we have right now, the scenario is dynamic.

Speaker #3: If we have deterioration, we're going to bring more information. The private payroll loan. In the previous product, that was you had specific agreements 40 billion reais market.

Speaker #3: So we had 30% of the market. 12 billion reais of portfolio. It's a product that we are learning to work throughout the years. By the know-how of giving it to the credit to the companies or the individuals.

Gabriel Amado de Moura: It's a product that we are learning to work throughout the years by the knowhow of giving it to the credit to the companies or the individuals. The private payroll loan, consignado, is the junction of these two managements. From the inception, we've focused on a public that is the target audience for this product. It's a public that most of them have an account, checking account in the bank. We haven't operated in the Open Finance because of the delinquency that is very high. The stability of the operation is still relevant issues and some processes that need to evolve. Messages. We are growing with quality. We should stabilize the deadlines, delays, indices similar to the previous product, and we're going to see the nominals that are going to grow. Well, the portfolio grows a lot, obviously. It's not going to grow ad aeternum.

Milton Maluhy Filho: It's a product that we are learning to work throughout the years by the knowhow of giving it to the credit to the companies or the individuals. The private payroll loan, Consignado, is the junction of these two managements. From the inception, we've focused on a public that is the target audience for this product. It's a public that most of them have an account, checking account in the bank. We haven't operated in the Open Finance because of the delinquency that is very high. The stability of the operation is still relevant issues and some processes that need to evolve. Messages. We are growing with quality. We should stabilize the deadlines, delays, indices similar to the previous product, and we're going to see the nominals that are going to grow. Well, the portfolio grows a lot, obviously. It's not going to grow ad aeternum.

Speaker #3: The private payroll loan, consignado, is the junction of these two managements. From the inception, we focus on a public that is the target audience for this product.

Speaker #3: It's a public that most of them have an account. Checking account in the bank. We have an operated in the open sea because of the delinquency that is very high.

Speaker #3: The stability of the operation still relevant issues. And some processes that need to evolve. Messages. We are growing with quality. We should stabilize the deadlines, delays, indices, similar to the previous product.

Speaker #3: And we're going to see the nominals. That are going to grow. Well, the portfolio grows a lot, obviously. It's not going to grow ad aeternum.

Speaker #3: It should stabilize. But we see great opportunities to produce, with great risks and a dynamic of delinquency that is very adequate. Most importantly, we are running—and I presented that we're running—at about half of the indicator of the delays of the system. That data has been published recently.

Gabriel Amado de Moura: It should stabilize, we see great opportunities to produce with great risks and a dynamic of delinquency that is very adequate. Most importantly, we are running, and I presented that, we're running at about half of the indicator of the delays of the system. The data has been published recently. We're running with an indicator of delays, maybe at a half. It's an operation that creates value, generates profitability, and most importantly, we service our clients with the products that are more adequate. This is the focus. I want to be a bank focused on the client. I want to offer a product that is cheaper. It helps to explain why the individuals, they don't grow. In the employees, we drop in 7%, and we grow. Well, there's an exchange. We can avoid the over-indebtedness of our clients.

Milton Maluhy Filho: It should stabilize, we see great opportunities to produce with great risks and a dynamic of delinquency that is very adequate. Most importantly, we are running, and I presented that, we're running at about half of the indicator of the delays of the system. The data has been published recently. We're running with an indicator of delays, maybe at a half. It's an operation that creates value, generates profitability, and most importantly, we service our clients with the products that are more adequate. This is the focus. I want to be a bank focused on the client. I want to offer a product that is cheaper. It helps to explain why the individuals, they don't grow. In the employees, we drop in 7%, and we grow. Well, there's an exchange. We can avoid the over-indebtedness of our clients.

Speaker #3: We're running with an indicator of delays, maybe at the half. So it's an operation that creates value, generates profitability, and, most importantly, we service our clients with the products that are more adequate.

Speaker #3: This is the focus. I want to be a bank focused on the client. I want to offer a product that is cheaper. And it helps to explain why individuals don't grow.

Speaker #3: In the employees, we drop in 7%. And we grow well, there is an exchange. So we can avoid the over-indebtedness of our clients. I've brought the data that in our portfolio, our clients have performed and the delay levels has been very well behaved.

Gabriel Amado de Moura: I've brought the data that in our portfolio, our clients have performed, and the delay levels have been very well-behaved. There was the comeback of the change of the mechanics of the real estate credit, 65 directed, 20 compulsory, and 15 free resources. Of the 20 of the compulsory, five came back. That generated an additional resources, and we have the real estate credit in the client vision. How I service the client in the completeness of their needs in the best way possible. Given the mix that we have between treasury and savings and other hedges that we do, we grow with quality because we see that portfolio. We need to see it as the funding comes back. The model changes next year. We have gradual releases of compulsory, 1.5% for the next 10 years. At the limit, in a time, you have two forces.

Milton Maluhy Filho: I've brought the data that in our portfolio, our clients have performed, and the delay levels have been very well-behaved. There was the comeback of the change of the mechanics of the real estate credit, 65 directed, 20 compulsory, and 15 free resources. Of the 20 of the compulsory, five came back. That generated an additional resources, and we have the real estate credit in the client vision. How I service the client in the completeness of their needs in the best way possible. Given the mix that we have between treasury and savings and other hedges that we do, we grow with quality because we see that portfolio. We need to see it as the funding comes back. The model changes next year. We have gradual releases of compulsory, 1.5% for the next 10 years. At the limit, in a time, you have two forces.

Speaker #3: So there was become back of the change of the mechanics of the real estate credit 65 directed 20 compulsory and 15 free resources of the 20 of the compulsory 5 came back.

Speaker #3: So, that generated additional resources. And we have the real estate credit in the client vision. How do I service the client in the completeness of their needs and in the best way possible? And, given the mix that we have between treasury and savings and all the hedges that we do, we grow with quality because we see that portfolio—we need to see it as the funding comes back.

Speaker #3: The model changes next year. We have gradual releases of a compulsory one and a half percent for the next 10 years. At the limit, in time, you have two forces.

Speaker #3: One is savings, more pressured. It just dropped 0.6 in this period, so it has a behavior that is stable. But you have the order strength, which is the increase to the direction that will release fundings to the markets.

Gabriel Amado de Moura: One is savings more pressured. It just dropped 0.6 in this period, it has a behavior that is stable. You have the other strength, which is the increase to the direction that will release fundings to the market. We still see the capacity to grow pricing correctly. If you compare it to any other banks, and I'm talking about the private ones, our return for every real margin in credit is the best given our relationship of treasury and real estate credit. We are very comfortable. Companies are dependent on the capital market. We have a capital market that is more erratic over the last months. Two months weaker, one more active. Up ahead, it depends on the activities which will drive our capacity to grow. Most importantly, we've been very disciplined in the capital allocation and returns.

Milton Maluhy Filho: One is savings more pressured. It just dropped 0.6% in this period, it has a behavior that is stable. You have the other strength, which is the increase to the direction that will release fundings to the market. We still see the capacity to grow pricing correctly. If you compare it to any other banks, and I'm talking about the private ones, our return for every real margin in credit is the best given our relationship of treasury and real estate credit. We are very comfortable. Companies are dependent on the capital market. We have a capital market that is more erratic over the last months. Two months weaker, one more active. Up ahead, it depends on the activities which will drive our capacity to grow. Most importantly, we've been very disciplined in the capital allocation and returns.

Speaker #3: So we still see the capacity to grow pricing correctly. If you compare it to any other banks, and I'm talking about the private ones, our return for every real margin in credit is the best given our relationship of treasury and real estate credit.

Speaker #3: We are very comfortable. Companies that depend on the capital market, we have a capital market that is more erratic over the last months. Two months, weaker, one more active.

Speaker #3: Looking ahead, it depends on the activities which will drive our capacity to grow. Most importantly, we've been very disciplined in capital allocation and returns.

Speaker #3: Very easy to grow portfolio with the wrong returns. When we look at the whole portfolios that we have, vehicles, big companies, we've seen the level of appetite in the market that is higher.

Gabriel Amado de Moura: Very easy to grow a portfolio with the wrong returns. When we look at the whole portfolios that we have, vehicles, big companies, we've seen the level of appetite in the market that is higher. When we see the operation of the model of return with the allocated capital, and we have an accuracy level that is very high, in these models, we see that these operations are destroying the value for the shareholder when they're below capital. This is not the dynamic of our vision. Even so, we see opportunities of increasing in allocation. The portfolio will continue to grow with quality. We've grown in the companies and individuals and the best clients and the best ratings, resilient public, and we've grown margin of assets in the same level. What is accelerated is structured and liabilities. Well, dividends, your question.

Milton Maluhy Filho: Very easy to grow a portfolio with the wrong returns. When we look at the whole portfolios that we have, vehicles, big companies, we've seen the level of appetite in the market that is higher. When we see the operation of the model of return with the allocated capital, and we have an accuracy level that is very high, in these models, we see that these operations are destroying the value for the shareholder when they're below capital. This is not the dynamic of our vision. Even so, we see opportunities of increasing in allocation. The portfolio will continue to grow with quality. We've grown in the companies and individuals and the best clients and the best ratings, resilient public, and we've grown margin of assets in the same level. What is accelerated is structured and liabilities. Well, dividends, your question.

Speaker #3: When we see the operation of the model of return with the allocated capital and we have an accuracy level that is very high, and these models, we see that these operations are destroying the value for the shareholder.

Speaker #3: When they're below capital, this is not the dynamic of our vision. Even so, we see opportunities to increase allocation. The portfolio will continue to grow with quality.

Speaker #3: We've grown in the companies and individuals in the best clients and the best ratings. Resilient publics. And we've grown margin of assets in the same level.

Speaker #3: And what decelerated is structured and liabilities. Well, dividends, your question. It doesn't have that very clear dynamic because every company releases their dividends whenever they want.

Gabriel Amado de Moura: It doesn't have that very clear dynamic because every company releases their dividends whenever they want. You have to have a fiscal base to be able to operate with these operations, this is a care that we have. The issues of the DTAs, which is very relevant. Secondly, typically, the companies give dividends at the end of the year, the end of the first, eventually, there's going to be a structuring. The client needs to rescue, they're going to pay an extraordinary dividend. It's been erratic for us, this portfolio. It's difficult to affirm how the margin will behave because since we are at a Well, any marginal operation will generate volatility. That's why we are looking at the guidance. Well, at the end of the year, since the dividend's going to be paid, we have more surety in our operations. Next question. Beatriz, UBS.

Milton Maluhy Filho: It doesn't have that very clear dynamic because every company releases their dividends whenever they want. You have to have a fiscal base to be able to operate with these operations, this is a care that we have. The issues of the DTAs, which is very relevant. Secondly, typically, the companies give dividends at the end of the year, the end of the first, eventually, there's going to be a structuring. The client needs to rescue, they're going to pay an extraordinary dividend. It's been erratic for us, this portfolio. It's difficult to affirm how the margin will behave because since we are at a Well, any marginal operation will generate volatility. That's why we are looking at the guidance. Well, at the end of the year, since the dividend's going to be paid, we have more surety in our operations.

Speaker #3: So you have to have a fiscal base to be able to operate with these operations. So this is a care that we have. The issues of the DTAs, which is very relevant, secondly, typically the companies give dividends at the end of the year.

Speaker #3: That's the end of the first part. But eventually, there's going to be a restructuring the client needs to execute, and they're going to pay an extraordinary dividend.

Speaker #3: It's been erratic for us this portfolio. It's difficult to affirm how the margin will behave because since we are at a well, any marginal operation will generate volatility.

Speaker #3: That's why we are looking at the guidance. Well, at the end of the year, since the dividend is going to be paid, then we have more surety in our operations.

Speaker #3: Next question. Beatrice, UBS. Welcome. Good morning. A nossa pergunta. Thank you for the question. Our question is about efficiency. In the quarter, it's a bit higher due to seasonality.

Gustavo Lopes Rodrigues: Next question. Beatriz, UBS.

Gabriel Amado de Moura: Welcome. Good morning. Thank you for the question. Our question is about efficiency. In the quarter, it is a bit higher due to seasonality, but we see a trend that is very good. Do you still see a space for an improvement in this index? If yes, what are the main drivers? Thank you. For continuous improvement. Thank you, Beatriz. Hi, Beatriz. Yes. Do you remember that in the previous quarter, we brought a bit of a view of the efficiency level and time, looking a few segments of business? We had efficiency indices that were benchmarks and where we saw segments that are still scalable from the standpoint of efficiency indices. The efficiency index depends on the revenue. That is the focus. We see that this is the best Q2 that we had, the best H1 that we had in the efficiency semester. There is a seasonality.

[Analyst] (UBS): Welcome. Good morning. Thank you for the question. Our question is about efficiency. In the quarter, it is a bit higher due to seasonality, but we see a trend that is very good. Do you still see a space for an improvement in this index? If yes, what are the main drivers? Thank you. For continuous improvement.

Speaker #3: But we see a trend that is very good. Do you still see space for improvement in this index? And if yes, what are the main drivers?

Speaker #3: Thank you. For continuous improvement. Thank you, Beatrice. Hi, Beatrice. Yes. Do you remember that in the previous quarter, we brought a bit of a view of the efficiency level and time?

Gabriel Amado de Moura: Thank you, Beatriz. Hi, Beatriz. Yes. Do you remember that in the previous quarter, we brought a bit of a view of the efficiency level and time, looking a few segments of business? We had efficiency indices that were benchmarks and where we saw segments that are still scalable from the standpoint of efficiency indices. The efficiency index depends on the revenue. That is the focus. We see that this is the best Q2 that we had, the best H1 that we had in the efficiency semester. There is a seasonality.

Speaker #3: Looking a few segments of business. We had efficiency indices that were benchmarked and where we saw segments that are still scalable. From the standpoint of efficiency indices.

Speaker #3: The efficiency index depends on the revenue—that’s the focus. We see that this is the best second quarter that we’ve had, and the best first semester that we’ve had in the efficiency semester.

Speaker #3: There is a seasonality. The first semester is where we see fewer expenses. And the levers are what we see: the application of technology. A lot of the fruits of the investments that the bank has made throughout the years—they are fruits.

Gabriel Amado de Moura: H1 is where we see less expenses, the levers are what we have seen the application of technology. A lot of the fruits of the investments that the bank has done throughout the years, they bear fruits, and we get to an efficiency level that is very good. It is a virtuous trend. It is not from this period. If you have the longer periods of the bank, you are going to see this. We believe that this has the potential, the plans, the level of detail, the discipline that the bank has, and scalability is big, and it is what we expect for the future. I reinforce the words of Gabriel, yes, it is very demanding. Yes.

Speaker #3: And we get to an efficiency level that is very good. It's a virtuous trend. It's not just from this period. If you look at longer periods for the bank, you're going to see this.

Speaker #3: We believe that this has the potential to scale. The level of detail and the discipline the bank has in scalability is significant, and it's what we expect for the future.

Speaker #3: And I reinforce the words of Gabriel, and yes, it's very demanding. Yes. Thank you, guys. So, Marcelo Mizrahi, BBI. So, thank you for the opportunity.

Milton Maluhy Filho: I reinforce the words of Gabriel, yes, it is very demanding. Yes.

Gabriel Amado de Moura: Thank you.

[Analyst] (UBS): Thank you.

Gabriel Amado de Moura: Thank you, guys. Marcelo Mizrahi, Bradesco BBI. Thank you for the opportunity. Congratulations on the results. I want to see the service line with a review of the guidance, I wanted to understand more of the dynamics that provoked this review and what is the strategy of the bank. That is about the issuance of credit cards, the lines of payment, the payments of companies, acquirers, and even the insurance line. I wanted to understand the service lines up ahead. Looking at the dynamic of this activity, the mixed services should have a behavior that is more cautious and lower growth, maybe for next year, given the growth of cash that is potentially lower, these lines can be affected. What is in here, what is a change of strategy, the maintenance of the strategy, do you agree with this vision?

Gustavo Lopes Rodrigues: Thank you, guys. Marcelo Mizrahi, Bradesco BBI.

Marcelo Mizrahi: Thank you for the opportunity. Congratulations on the results. I want to see the service line with a review of the guidance, I wanted to understand more of the dynamics that provoked this review and what is the strategy of the bank. That is about the issuance of credit cards, the lines of payment, the payments of companies, acquirers, and even the insurance line. I wanted to understand the service lines up ahead. Looking at the dynamic of this activity, the mixed services should have a behavior that is more cautious and lower growth, maybe for next year, given the growth of cash that is potentially lower, these lines can be affected.

Speaker #3: Congratulations on the results. I want to see the service line, with a review of the guidance, but I also wanted to understand more of the dynamics that provoked this review.

Speaker #3: And what is the strategy of the bank? About the issuance of credit cards, the lines of payment, the payments of companies, acquirings, and even the insurance line.

Speaker #3: I wanted to understand the service lines up ahead. But looking at the dynamic of this activity, the mixed services should have a behavior that is more cautious.

Speaker #3: And lower growth, maybe for the next year, given the growth of cash that is potentially lower. These lines can be affected. What is in here?

Marcelo Mizrahi: What is in here, what is a change of strategy, the maintenance of the strategy, do you agree with this vision? Thinking about the mix of the portfolio, the strategy of the bank, do we think about this weaker line in the next quarters?

Speaker #3: What is the change of strategy? The maintenance of the strategy? Do you agree with this vision? Thinking about the mix of the portfolio of the strategy of the bank, do we think about this weaker line in the next quarters?

Gabriel Amado de Moura: Thinking about the mix of the portfolio, the strategy of the bank, do we think about this weaker line in the next quarters? Thank you. Thank you for your participation. I think it is great that we can talk about this line because there was a change, and for every component of the services and insurance, there should be a small explanation. First, talking about credit cards, specifically individuals, there is a double effect. If we can summarize the strategy. First, throughout the years, we did an important de-risking in the portfolio. In the incomes or the less resilient publics, we did a de-risking that is very relevant. Looking here on the rearview mirror, we lost marginally in revenue. We saved important volumes of loss of credit. The strategy was good. Second, we have been ever more focused in the high income, which is where we are growing the portfolio.

Speaker #3: Thank you. Thank you for your participation. I think it's great that we can talk about this line because there was a change. And for every component, of the services and insurance, there should be a small explanation.

Milton Maluhy Filho: Thank you. Thank you for your participation. I think it is great that we can talk about this line because there was a change, and for every component of the services and insurance, there should be a small explanation. First, talking about credit cards, specifically individuals, there is a double effect. If we can summarize the strategy. First, throughout the years, we did an important de-risking in the portfolio. In the incomes or the less resilient publics, we did a de-risking that is very relevant. Looking here on the rearview mirror, we lost marginally in revenue. We saved important volumes of loss of credit. The strategy was good. Second, we have been ever more focused in the high income, which is where we are growing the portfolio.

Speaker #3: So, first, talking about credit cards, specifically individuals, there is a double effect. If we can summarize the strategy: first, throughout the years, we did a de-risking.

Speaker #3: Important de-risking in the portfolio. In the incomes or the less resilient publics, we did a de-risking that is very relevant. Looking here in the rearview mirror, we lost marginally revenue.

Speaker #3: We saved important volumes of loss of credit, so the strategy was good. Second, we've been ever more focused on high income, which is where we're going in the portfolio.

Speaker #3: And when we grow in these publics, it's a product that is clearly more expensive. We do a reduction of the payments monthly payments so we reduce the friction and we are generating an operation that is completely dedicated to the vision of lifetime value, engagement with the client, reduce the friction of the yearly rate but the rewards are more expensive.

Gabriel Amado de Moura: When we grow in these publics, it is a product that is clearly more expensive. We do a reduction of the monthly payments, so we reduce the friction, and we are generating an operation that is completely dedicated to the vision of lifetime value engagement with the client. You reduce the friction of the yearly rate, the rewards are more expensive. We see the players using the credit card as a cost of acquisition of the client, making it more expensive. In our vision, the public demands better service with better conditions and in the standpoint of the vision of product. This, we have the exchange in an adequate rhythm. There is a strategy with the services and insurance.

Milton Maluhy Filho: When we grow in these publics, it is a product that is clearly more expensive. We do a reduction of the monthly payments, so we reduce the friction, and we are generating an operation that is completely dedicated to the vision of lifetime value engagement with the client. You reduce the friction of the yearly rate, the rewards are more expensive. We see the players using the credit card as a cost of acquisition of the client, making it more expensive. In our vision, the public demands better service with better conditions and in the standpoint of the vision of product. This, we have the exchange in an adequate rhythm. There is a strategy with the services and insurance.

Speaker #3: We see the players using the credit card as an cost of acquisition of the client. Making it more expensive. And in our vision, the public demands better service with best conditions.

Speaker #3: And from the standpoint of the vision of the product, we have the exchange at an adequate rhythm. There is a strategy with the services and insurance.

Speaker #3: A great deal of the growth has been financed with the portfolio, with the interest rates. And we are using the credit card product as a finance tool for consumption and not as a product.

Gabriel Amado de Moura: A great deal of the growth has been financed with the portfolio, with the interest rates, and we are using the product of credit card as a finance for the consumption and not as a product for the client that has a more deteriorated situation and has an overdraft or the payment of the credit card. We are increasing the elasticity for the high income clients, and we are doing this in a very material way. This component has to be in the context of the credit card strategy, but it is in the margin of the clients. It is not in the revenue of services for the credit card. The administration of resources is very important. The fee, even though there is a more difficult market, we are the second asset that has a good performance relative, but it was not good for everyone. It means that since fee comes in Q2 and Q4, we had a lower performance than Q3 of last year. It is a risk management dynamic. We hope to be in the correct side, even though with the volatility, it is difficult to generate fee results. On the other hand, we are growing the balances and the rates are kept, and that generates resources for administration. Also the consortium has helped a lot.

Milton Maluhy Filho: A great deal of the growth has been financed with the portfolio, with the interest rates, and we are using the product of credit card as a finance for the consumption and not as a product for the client that has a more deteriorated situation and has an overdraft or the payment of the credit card. We are increasing the elasticity for the high income clients, and we are doing this in a very material way. This component has to be in the context of the credit card strategy, but it is in the margin of the clients. It is not in the revenue of services for the credit card.

Speaker #3: For the client that has a more deteriorated situation and has an overdraft or the payment of the credit card. There is a series of we're increasing the elasticity for the high income clients and we're doing this in a very material way.

Speaker #3: So this component has to be in the context of the credit card strategy, but it's in the margin of the clients. It's not in the revenue of services for the credit card.

Speaker #3: The administration of resources. It's very important. The per fee even though there is a more difficult market we are the second asset that has a good performance relative but it wasn't good for everyone.

Milton Maluhy Filho: The administration of resources is very important. The fee, even though there is a more difficult market, we are the second asset that has a good performance relative, but it was not good for everyone. It means that since fee comes in Q2 and Q4, we had a lower performance than Q3 of last year. It is a risk management dynamic. We hope to be in the correct side, even though with the volatility, it is difficult to generate fee results. On the other hand, we are growing the balances and the rates are kept, and that generates resources for administration. Also the consortium has helped a lot.

Speaker #3: So, it means that since performance fee comes in the second quarter, and in the fourth quarter we had a lower performance than in the third quarter of last year, it's a risk management dynamic.

Gabriel Amado de Moura: When we talk about the investment bank, well, when we see ECM, M&A stopped. We have good. Fixed income is a better month in June. We have to remember, we like to look at the operations of the bonds and real estate, specifically in the rankings, joining what is origination and distribution.

Speaker #3: We hope to be in the correct side even though with the volatility is difficult to generate per fee results and on the other hand we're growing the balances.

Speaker #3: And the rates are kept, and that generates resources for administration. Also, the consortium has helped a lot. When we talk about the investment bank, well, when we see ECM and M&A stopped, we have good results, and fixed income had a better month in June.

Milton Maluhy Filho: When we talk about the investment bank, well, when we see ECM, M&A stopped. We have good. Fixed income is a better month in June. We have to remember, we like to look at the operations of the bonds and real estate, specifically in the rankings, joining what is origination and distribution. As you can see, we are still the leaders with a big advantage in distribution, it shows that a lot of the origination we distribute in the market. We don't do those operations exclusively for balance. We do it by the good dynamic of the capital markets and the operations for the distribution of the markets. This is an important component to see, because these operations, when you see the result all in, which is the spread of credit plus the fee that you get, we've seen operations in the market that are very much below the cost of capital.

Speaker #3: But we have to remember, we like the bonds and real estate specifically in the rankings, joining what is origination and distribution. As you can see, we are still the leaders with a big advantage.

Gabriel Amado de Moura: As you can see, we are still the leaders with a big advantage in distribution, it shows that a lot of the origination we distribute in the market. We don't do those operations exclusively for balance. We do it by the good dynamic of the capital markets and the operations for the distribution of the markets. This is an important component to see, because these operations, when you see the result all in, which is the spread of credit plus the fee that you get, we've seen operations in the market that are very much below the cost of capital. A great deal of the operations that we lost, we lost because of price, because the operation doesn't return cost of capital, and it's been years operating.

Speaker #3: In distribution and it shows that a lot of the origination we distribute in the market. And we don't do those operations exclusively for balance.

Speaker #3: We do it by the good dynamic of the capital markets and the operations for the distribution of the markets. And this is an important component to see.

Speaker #3: Because these operations when you see the result all in which is the spread of credit plus the fee that you get and then we've seen operations in the market that are very much below the cost of capital.

Speaker #3: So, a great deal of the operations that we lost, we lost because of price—because the operation doesn't return cost of capital, and it's been years operating.

Milton Maluhy Filho: A great deal of the operations that we lost, we lost because of price, because the operation doesn't return cost of capital, and it's been years operating. It's not difficult to do the calculation of capital allocation and return the operations that come with between 1% and 12% that destroy value in the vision of the client. There is an important vision that depends on the dynamic of the market, it depends on the higher risk. These returns that I'm mentioning are considering the fee, which is recognized at the end. The risk that you run is recognized big risks, the duration of these portfolios might be seven years, you have that tied down for that time. You have an asset of low profitability because it gives 12% of return, considering 12% on average, we've seen operations below that, considering the fee. That dynamic is bad.

Speaker #3: It's not difficult to do the calculation of capital allocation and return. The operations that come between 1% and 12%—that destroy value in the vision of the client—but there is an important vision that depends on the dynamics of the market, and it depends on the higher risk.

Gabriel Amado de Moura: It's not difficult to do the calculation of capital allocation and return the operations that come with between 1% and 12% that destroy value in the vision of the client. There is an important vision that depends on the dynamic of the market, it depends on the higher risk. These returns that I'm mentioning are considering the fee, which is recognized at the end. The risk that you run is recognized big risks, the duration of these portfolios might be 7 years, you have that tied down for that time. You have an asset of low profitability because it gives 12% of return, considering 12% on average, we've seen operations below that, considering the fee. That dynamic is bad.

Speaker #3: These returns that I'm mentioning are considering the fee which is recognized at the end. So the risk that you recognize that you risk that you run is big recognized big risks and the duration of these portfolios might be seven years.

Speaker #3: So you have that tie-down for that time. You have an asset of low profitability because it gives a 12% return, considering 12% on average.

Speaker #3: We've seen operations below that, considering the fee. So that dynamic is bad. You recognize the fee, you do a big result, and eventually, you might be recognizing the operation with a lower profitability in the long term, which is diluted for the profitability.

Gabriel Amado de Moura: You recognize a fee, you do a big result, eventually, you might be recognizing the operation with a lower profitability at the long term, which is diluted for the profitability. The other one, we try to be very careful with the credit. Looking at the operations that we lose because of appetite. It goes through any reasons, but sometimes we don't do some operations because it affects the market as a whole. When we go to insurance, we've had an important component. For growth of the operation of the core, the bank insurance is doing well. What doesn't mean that that line is exclusively for our bank insurance. It brings wraps and other effects. You might have some volatility there in the yearly and quarter-on-quarter, the patrimony equivalents. We have public data, that's been displayed, this is clear.

Milton Maluhy Filho: You recognize a fee, you do a big result, eventually, you might be recognizing the operation with a lower profitability at the long term, which is diluted for the profitability. The other one, we try to be very careful with the credit. Looking at the operations that we lose because of appetite. It goes through any reasons, but sometimes we don't do some operations because it affects the market as a whole. When we go to insurance, we've had an important component. For growth of the operation of the core, the bank insurance is doing well. What doesn't mean that that line is exclusively for our bank insurance. It brings wraps and other effects. You might have some volatility there in the yearly and quarter-on-quarter, the patrimony equivalents. We have public data, that's been displayed, this is clear.

Speaker #3: For the other one, we try to be very careful with the credit. Looking at the operations that we lose because of appetite, it goes through any reasons.

Speaker #3: But sometimes we don't do some operations because it affects the market as a whole. When we go to insurance, we've had an important component.

Speaker #3: For growth of the operation of the core, the bancassurance is doing well. That doesn't mean that that line is exclusively for our bancassurance.

Speaker #3: It brings reps and other effects you might have some volatility there in the yearly and quarter on quarter the patrimonial equivalence we have public data and that's been displayed and this is clear.

Speaker #3: So we can grow with a lot of quality. We've grown in the year on year. The premiums issued are relevant and with the numbers very well behaved.

Gabriel Amado de Moura: We can grow with a lot of quality. We've grown in the year-on-year. The premiums issued are relevant, the numbers very well behaved. The social security has an important result as well, looking up ahead, it depends on the activity, every line has a different strategy. It's important that we have that vision of the client and companies, I didn't talk about the flows and receivables. It's important that we brought Rede in-house in the results of Rede. There is a double effect. First, the mix that we grow more in the wholesale than the retail, which affects the results. Secondly, the integration of the bank to the business, we don't look at the vision of the product, we look at clients. The floating in the business of Rede, it's not in the finest way the margin with the client.

Milton Maluhy Filho: We can grow with a lot of quality. We've grown in the year-on-year. The premiums issued are relevant, the numbers very well behaved. The social security has an important result as well, looking up ahead, it depends on the activity, every line has a different strategy. It's important that we have that vision of the client and companies, I didn't talk about the flows and receivables. It's important that we brought Rede in-house in the results of Rede. There is a double effect. First, the mix that we grow more in the wholesale than the retail, which affects the results. Secondly, the integration of the bank to the business, we don't look at the vision of the product, we look at clients. The floating in the business of Rede, it's not in the finest way the margin with the client.

Speaker #3: The government has Social Security, which has an important result as well. So, looking ahead, it depends on the activity, but every line has a different strategy.

Speaker #3: It's important that we have that vision of the client and companies. I didn't talk about the flows and receivables. It's important that we brought Ready in-house. In the results of Ready, there is a double effect.

Speaker #3: First, the mix that we grew more in the wholesale than the retail, which affects the result. Secondly, the integration of the bank to the business, so we don't look at the vision of the product.

Speaker #3: We look at clients. The floating in the business of ready it's not in the slightest with the margin with the client. It's an adjustment that we should do up ahead.

Gabriel Amado de Moura: It's an adjustment that we should do up ahead, having a clearer view of the whole. The big offender are the packages of companies, tariffs that we are reducing directionally. The objective of this reduction is to remove the friction, increasing the lifetime value and creating long-term value. We see the rates of engagement with the packages. The individuals are dropping. We're generating a result that it's a third of what we generated in the past. When we did the transition, without being the bank more efficient, more focused with the client, that for the long term is very relevant. For the future, it depends on the activities. Let's see how can we grow in this. Briefly, we will be budgeting in 2027, post-election, the space of the interest rates. They are going to facilitate the opening of some of these lines.

Milton Maluhy Filho: It's an adjustment that we should do up ahead, having a clearer view of the whole. The big offender are the packages of companies, tariffs that we are reducing directionally. The objective of this reduction is to remove the friction, increasing the lifetime value and creating long-term value. We see the rates of engagement with the packages. The individuals are dropping. We're generating a result that it's a third of what we generated in the past. When we did the transition, without being the bank more efficient, more focused with the client, that for the long term is very relevant. For the future, it depends on the activities. Let's see how can we grow in this. Briefly, we will be budgeting in 2027, post-election, the space of the interest rates. They are going to facilitate the opening of some of these lines.

Speaker #3: Having a clearer view of the whole and a big offender are the packages of companies tariffs that we are reducing directionally. And the objection of this reduction is to remove the friction increasing the lifetime value and creating long-term value.

Speaker #3: So we see the rates of engagement with the packages and the individuals are dropping. We're generating a result that it's a third of what we generated in the past.

Speaker #3: When we did the transition without being the bank more efficient more focused with the client that for the long-term is very relevant. And for the future it depends on the activities.

Speaker #3: Let's see how can we grow in this and briefly we will be budgeting in 2027 post-election. The space of the interest rates they are going to facilitate the opening of some of these lines.

Speaker #3: Thank you, Marcelo. Now we have Yuri Fernandez. Good morning. Hello, good morning, Milton. Congratulations. Well, the profitability growing in less than portfolio so quality and creation of results.

Gustavo Lopes Rodrigues: Thank you, Marcelo. Now we have Yuri Fernandes. Good morning.

Yuri Fernandes: Hello. Good morning, Milton. Congratulations. Well, the profitability growing less than portfolio. Quality and creation of results. I wanted to go back to asset quality. This presentation you commented. I just wanted to know, on the 15 to 90 for the individuals and SMEs. There is a seasonal improvement and a part of this level you explained, which is with the government programs. Even the individuals that shouldn't have a lot of effect on that, it reflects upon it. It's not a vertiginous drop. It's going to be 10, 20 basis points. It's flat. I want to understand if you're comfortable with the asset quality. Well, things are not going to improve a lot. There is a worsening. I know that Itaú has a better balance. You're more prepared. We are concerned. Are we going to see any levels of worsening or no?

Yuri Fernandes: Hello. Good morning, Milton. Congratulations. Well, the profitability growing less than portfolio. Quality and creation of results. I wanted to go back to asset quality. This presentation you commented. I just wanted to know, on the 15-90 for the individuals and SMEs. There is a seasonal improvement and a part of this level you explained, which is with the government programs. Even the individuals that shouldn't have a lot of effect on that, it reflects upon it. It's not a vertiginous drop. It's going to be 10, 20 basis points. It's flat. I want to understand if you're comfortable with the asset quality. Well, things are not going to improve a lot.

Speaker #3: What I wanted to do is go back to asset quality. In this presentation, you commented, and I just wanted to ask about the 1,590 for individuals and SME.

Speaker #3: And there is a seasonal improvement in a part of this level you explained, which is related to the government programs, but even the individuals—that shouldn’t have a lot of effect on that—it reflects upon it.

Speaker #3: It's not a vertiginous drop. It's going to be 10, 20 bips and it's flat. So I want to understand is if you're comfortable with the asset quality well, things are not going to improve a lot.

Speaker #3: There's a worsening. I know that Itau has a better balance. You're more prepared but we are concerned are we going to see any levels of worsening or no.

Yuri Fernandes: There is a worsening. I know that Itaú has a better balance. You're more prepared. We are concerned. Are we going to see any levels of worsening or no? This is a scenario of comfort, stability to understand. If you can explain what happened with the 15-90.

Speaker #3: This is a scenario of comfort, stability, to understand and if you can explain what happened with the 15 to 90. Thank you, Yuri. Great to see you.

Gabriel Amado de Moura: This is a scenario of comfort, stability to understand. If you can explain what happened with the 15 to 90. Thank you, Yuri. Great to see you. First, I believe that what you've felt that I tried to transmit during the presentation, you capture it very well. Evidently, the scenario, if we look at the previous quarter and the one now, the delays that are published in the products, we see a relevant increase with the over 90 delays. First information on our side, we didn't change at any point our policies of write-off for any product. The 4.966, it gives you liberty. We've kept it as is. Since our expectation to take the client to write off didn't change. We don't do that for provision or using the degrees of freedom for that. Number two, the de-risking of the portfolio that is relevant was done.

Milton Maluhy Filho: Thank you, Yuri. Great to see you. First, I believe that what you've felt that I tried to transmit during the presentation, you capture it very well. Evidently, the scenario, if we look at the previous quarter and the one now, the delays that are published in the products, we see a relevant increase with the over 90 delays. First information on our side, we didn't change at any point our policies of write-off for any product. The 4.966, it gives you liberty. We've kept it as is. Since our expectation to take the client to write off didn't change. We don't do that for provision or using the degrees of freedom for that. Number two, the de-risking of the portfolio that is relevant was done.

Speaker #3: First, I believe that what you've felt that I tried to transmit during the presentation you capture it very well. Evidently, the scenario if we look at the previous quarter and the one now, the delays that are published in the products, we see a relevant increase with the over 90 delays.

Speaker #3: First, information on our side: we didn't change at any point our policies of write-off for any 4, 9, 6, 6 gives you liberty, but we've kept it as is.

Speaker #3: Since our expectation to give to take the plan to write off didn't change. We don't do that for provision or using the degrees of freedom.

Speaker #3: For that, number two, the de-risking of the portfolio that is relevant was done. Today, with the margin, we've managed to grow in a relevant way with more resilient portfolios—with the natural, with the individuals, and the companies, wholesale and retail—that has brought a lot of important results.

Gabriel Amado de Moura: Today with the margin, we have managed to grow in a relevant way with the more resilient portfolios, with the match offer, with the individuals and the companies, wholesale, retail, that has brought a lot of important results. What is the twist for the short-term delay? If you go back and look at how much we have grown in Q1 in regards to Q4 of the last year in the delays, short delays, you are going to see that we grow much less than what we grew originally. You see there we have grown 23 bps. It was much result to what we have managed to grow. Seasonally, we see a recovery higher with the short-term debt because Q1 seasonally is higher because of that. We do not expect to see it.

Milton Maluhy Filho: Today with the margin, we have managed to grow in a relevant way with the more resilient portfolios, with the match offer, with the individuals and the companies, wholesale, retail, that has brought a lot of important results. What is the twist for the short-term delay? If you go back and look at how much we have grown in Q1 in regards to Q4 of the last year in the delays, short delays, you are going to see that we grow much less than what we grew originally. You see there we have grown 23 basis points. It was much result to what we have managed to grow. Seasonally, we see a recovery higher with the short-term debt because Q1 seasonally is higher because of that. We do not expect to see it.

Speaker #3: What is the twist for the short-term delay? If you go back and look at how much we've grown in the first quarter in regards to the fourth quarter of the last year in the delays short delays you're going to see that we grow much less than what we grew originally.

Speaker #3: So you see there we've grown 23 bips. It was much below to what we've managed to grow. So seasonally we see a recovery higher with the short with the short-term debt because the first quarter seasonally is higher because of that.

Speaker #3: So we don't expect to see it. But since it was lower only 23 bips points and removing 23, 24 is the best indicator of the series then we ran at 50 bips, 60 bips in previous quarters.

Gabriel Amado de Moura: Since it was lower, only 23 basis points, and removing 23, 24 is the best indicator of the series, then we ran at 50 bps, 60 bps in previous quarters. It goes less in the subsequent quarters. There is not any signal. It is more difficult. We have worked with the indicators, but no signal of concern for our portfolio. Except that it is possible with the information that we have now, the income that is higher, interest rate that is higher, there is an over-offering of credit in the market over the years. We are very disciplined to grow in the correct way, but we are very at ease with the indicators. You can expect stability. These are volatilities, variations that are minuscule, no type of concern. If you look at the cost of credit, the portfolio is very well.

Milton Maluhy Filho: Since it was lower, only 23 basis points, and removing 23 basis points, 24 basis points is the best indicator of the series, then we ran at 50 basis points, 60 basis points in previous quarters. It goes less in the subsequent quarters. There is not any signal. It is more difficult. We have worked with the indicators, but no signal of concern for our portfolio. Except that it is possible with the information that we have now, the income that is higher, interest rate that is higher, there is an over-offering of credit in the market over the years. We are very disciplined to grow in the correct way, but we are very at ease with the indicators. You can expect stability. These are volatilities, variations that are minuscule, no type of concern. If you look at the cost of credit, the portfolio is very well.

Speaker #3: It goes down in the subsequent quarters, so there isn't any signal. It's more difficult. We've worked with the indicators, but there's no signal of concern for our portfolio.

Speaker #3: The information that we have now: the income is higher, interest rates are higher, and there has been an over-offering of credit in the market over the years.

Speaker #3: We are very disciplined to grow in the correct way. But we are very at ease with the indicators. You can expect stability these are volatilities variations that are minuscule so no type of credit or the portfolio is very well if you see the renegotiated portfolio that grows in this quarter we have two important explanations.

Gabriel Amado de Moura: If you see the renegotiated portfolio that grows in this quarter, we have two important explanations. First is the Desenrola, the program of the government. Secondly, in the renegotiated portfolio, we have still legal proceedings of last year, and you can only consider renegotiated once the plan has been implemented legally. When you look at the provisions, the creation is stronger now for Q2 because it is seasonal. If you go back to the previous quarters, its behavior is very similar. From the rollout for the short to the long, it grows in creation. There is a mechanical effect. We do not do provisions with the creation. We do expected loss. When the delay is short, we anticipate Q1. In Q2, we do not see that effect.

Milton Maluhy Filho: If you see the renegotiated portfolio that grows in this quarter, we have two important explanations. First is the Desenrola, the program of the government. Secondly, in the renegotiated portfolio, we have still legal proceedings of last year, and you can only consider renegotiated once the plan has been implemented legally. When you look at the provisions, the creation is stronger now for Q2 because it is seasonal. If you go back to the previous quarters, its behavior is very similar. From the rollout for the short to the long, it grows in creation. There is a mechanical effect. We do not do provisions with the creation. We do expected loss. When the delay is short, we anticipate Q1. In Q2, we do not see that effect.

Speaker #3: First is there's a draw up the program of the government and secondly in the renegotiated portfolio we have still legal proceedings of last year and you can only consider renegotiated once it's been the plan has been implemented.

Speaker #3: Legally, when you look at the provisions, the creation is stronger now for the second quarter because it's seasonal. If you go back to the previous quarters, its behavior is very similar.

Speaker #3: From the rollout for the short to the long it grows in creation there is a mechanical effect we don't we don't do provisions with the creation we do expected loss someone the delay is short we anticipate the first quarter and the second quarter we don't see that effect the coverage over creation that as the wholesale as a whole since we have guaranteed products so they demand less provisions so whatever you see we are very comfortable with the indicators of credit.

Gabriel Amado de Moura: The coverage over creation that as the wholesale as a whole, since we have guaranteed products, they demand less provisions. Wherever you see, we are very comfortable with the indicators of credit. Do not see in that any type of message. Our best estimation is stability. The best estimation for the individuals. For the companies, SMEs, we should worsen 10 basis in the next quarter and then stable onwards. With the information available now, it can worsen, but it is not what we are seeing. In general, with all the delays, and we should bring in the next quarter, which helps to bring the indicators of the market and our indicators, it is clear how we have distanced ourselves from the market. The mouth has been very open, and we are consistent with the growth of portfolio that is very adequate and the long-term views.

Milton Maluhy Filho: The coverage over creation that as the wholesale as a whole, since we have guaranteed products, they demand less provisions. Wherever you see, we are very comfortable with the indicators of credit. Do not see in that any type of message. Our best estimation is stability. The best estimation for the individuals. For the companies, SMEs, we should worsen 10 basis in the next quarter and then stable onwards. With the information available now, it can worsen, but it is not what we are seeing. In general, with all the delays, and we should bring in the next quarter, which helps to bring the indicators of the market and our indicators, it is clear how we have distanced ourselves from the market. The mouth has been very open, and we are consistent with the growth of portfolio that is very adequate and the long-term views. That's the message.

Speaker #3: Don't see in that any type of message. Our best estimation is stability. We don't have the best estimation for the individuals and the that's for individuals for the companies SMEs we should worsen 10 basis in the next quarter and then stable in onwards.

Speaker #3: With the information available now it can worsen but it's not what we are seeing. And in general with all the delays and we should bring in the next quarter which helps to bring the indicators of the market in our indicators it's clear how we've distant our distance ourselves from the market.

Speaker #3: The mouth has been very open, and we are consistent with the growth of the portfolio that is very adequate, and the long-term views. That's the message.

Gabriel Amado de Moura: That's the message. Thank you, Yuri. Now for the next question, Renato Meloni, Autonomous. The floor is yours.

Gustavo Lopes Rodrigues: Thank you, Yuri. Now for the next question, Renato Meloni, Autonomous. The floor is yours.

Speaker #3: Thank you, Yuri. Now for the next question. Renato Meloni, Autonomous. The floor is yours. Thank you for the opportunity. Congratulations. On the execution. I'm going to start in a broad question.

Renato Meloni: Thank you for the opportunity. Congratulations on the execution. I wanted to start in a broad question. If you can tell us, Milton, about the cycle of credit in the industry in the H2 and getting into 2027. How much is that helping with the interest rates in 2027? Well, with the previous comment, if you have any deceleration with the growth and the convergence for the guidance, where is that growth coming from? There is, maybe you're going to get above the guidance.

Speaker #3: If you can tell us, Milton, about the cycle of credit in the industry in the second semester and getting into 2027. So you have how much is that helping with the interest rates in 2027?

Gabriel Amado de Moura: How much is that helping with the interest rates in 2027? Well, with the previous comment, if you have any deceleration with the growth and the convergence for the guidance, where is that growth coming from? There is, maybe you're going to get above the guidance. Well, thank you, Renato. The cycle of credit, we've had it for many years. It will manifest differently from the different segments and the different products in every segment. The choice of how to give credit in a long term and the management of portfolio is vital for what we are delivering, because when we see the portfolio, you look at guidance, you look at macro, you look at the current conditions, you see all the models, and we had great results. We've advanced in artificial intelligence and an important results for the credit management.

Speaker #3: Well, with the previous if you have any deceleration with the growth and the conversion for the guidance, where is that growth coming from? There is maybe you're going to get above the guidance.

Milton Maluhy Filho: Well, thank you, Renato. The cycle of credit, we've had it for many years. It will manifest differently from the different segments and the different products in every segment. The choice of how to give credit in a long term and the management of portfolio is vital for what we are delivering, because when we see the portfolio, you look at guidance, you look at macro, you look at the current conditions, you see all the models, and we had great results. We've advanced in artificial intelligence and an important results for the credit management.

Speaker #3: Oh, thank you, Renato. The cycle of credit we've had it for many years. It will manifest differently from the different segments. And the different products in every segment.

Speaker #3: So the choice of how to give credit in a long-term and the management of portfolio is vital for what we are delivering because when we see the portfolio you look at guidance you look at macro you look at the current conditions you see all the models and we had great results.

Speaker #3: We've had we've advanced in artificial intelligence in important important results for the credit management. The cycle of credit we've seen a compromise of income government programs that are very of nature this umbrella had an important impact.

Gabriel Amado de Moura: The cycle of credit, we've seen a compromise of income. Government programs that are various of nature, this umbrella, had an important impact. In our portfolio, it's immaterial, but it's BRL 1.5 billion renegotiated. We presented 0.02% with the cost of credit. For other players, probably the impact is higher given the share of the program and given the public, which is less of our profile, and we also work in that public. The cycle of credit will be challenging because United States, possibly two hikes on the interest rates, the curves are going to be opening. There's going to be pressure. The premium of the risk for Brazil is short term, is well priced, possibly a cut of the meeting, which is the base scenario, but it depends on the United States.

Milton Maluhy Filho: The cycle of credit, we've seen a compromise of income. Government programs that are various of nature, this umbrella, had an important impact. In our portfolio, it's immaterial, but it's BRL 1.5 billion renegotiated. We presented 0.02% with the cost of credit. For other players, probably the impact is higher given the share of the program and given the public, which is less of our profile, and we also work in that public. The cycle of credit will be challenging because United States, possibly two hikes on the interest rates, the curves are going to be opening. There's going to be pressure. The premium of the risk for Brazil is short term, is well priced, possibly a cut of the meeting, which is the base scenario, but it depends on the United States.

Speaker #3: In our portfolio is immaterial but it's 1.5 1.5 billion renegotiated. We presented 002 with a cost of credit but for other players probably the impact is higher.

Speaker #3: Given the share of the program, and given the public with—which is less of our profile—and we also work in that public.

Speaker #3: So the cycle of credit will be challenging because United States possibly two hikes on the interest rates the high the curves are going to be opening.

Speaker #3: There's going to be pressure. The premium of the risk for Brazil in the short term is well priced. Possibly, a cut off at the meeting, which is the base scenario, but it depends on the United States.

Speaker #3: Because if the interest rates are higher then naturally that will pull the exchange rate and that will generate will difficult actually the work of the central bank.

Gabriel Amado de Moura: If the interest rates are higher, naturally that will pull the exchange rate and that will difficult actually the work of the central bank. That remains to be seen. We see that these programs are helping, but they're one-offs. They're not forever. Nothing substitute the discipline of risk management. What we see today is an excess of credit given to the market, is an excess of regulation that opened the market in a relevant way. There is a lot of players operating. There is a lot of credits for the growth of credit. Well, the clients are over in debt. The clients had four or five credit cards. Now we have five, six credit cards per individual. We grow the resilient clients. We help them to do that transition in the best way possible, but it's a scenario that inspires care.

Milton Maluhy Filho: If the interest rates are higher, naturally that will pull the exchange rate and that will difficult actually the work of the central bank. That remains to be seen. We see that these programs are helping, but they're one-offs. They're not forever. Nothing substitute the discipline of risk management. What we see today is an excess of credit given to the market, is an excess of regulation that opened the market in a relevant way. There is a lot of players operating. There is a lot of credits for the growth of credit. Well, the clients are over in debt. The clients had four or five credit cards. Now we have five, six credit cards per individual. We grow the resilient clients. We help them to do that transition in the best way possible, but it's a scenario that inspires care.

Speaker #3: That remains to be seen. So we see that these programs are helping but they're one-off. They're not forever. So nothing substitute the discipline of risk management.

Speaker #3: What we see today is an excess of credit given to the market, and an excess of regulation that opened the market in a relevant way.

Speaker #3: There are a lot of players operating. There is a lot of credit for the growth of credit as well. The clients are over-indebted. The clients had four or five credit cards.

Speaker #3: Now we have five or six credit cards per individual. So we grow the resilient clients, we help them to do that transition in the best way possible.

Speaker #3: But it's a scenario that that inspires care. For 2027 we still need to understand the real capacity but now you're final question is why don't you see that you have a better condition the balance is higher so you can grow.

Gabriel Amado de Moura: For 2027, we still need to understand the real capacity. Now your final question is, why don't you see that you have a better condition? The balance is higher, you can grow. We're going to get the mistakes on the long term. We need to have that discipline. That discipline has brought us here. Once you lose that discipline because you think that you need to grow, either to deliver results or to grow the top line, you deliver everything in the PDD thereafter, and that affects the capital and worsen your capacity to give credit again. You're in defensive, and you decrease the appetite. We always want to be always on, giving credit with quality, but with the clients that are more resilient, always looking at the long term.

Milton Maluhy Filho: For 2027, we still need to understand the real capacity. Now your final question is, why don't you see that you have a better condition? The balance is higher, you can grow. We're going to get the mistakes on the long term. We need to have that discipline. That discipline has brought us here. Once you lose that discipline because you think that you need to grow, either to deliver results or to grow the top line, you deliver everything in the PDD thereafter, and that affects the capital and worsen your capacity to give credit again. You're in defensive, and you decrease the appetite. We always want to be always on, giving credit with quality, but with the clients that are more resilient, always looking at the long term.

Speaker #3: Because then we're going to get the mistakes on the long term. So we need to have that discipline that discipline has brought us here.

Speaker #3: So once you lose that discipline because you think that you need to grow either to deliver results or to grow the top line you deliver the everything in the PDD thereafter and that affects the capital and it worsen your capacity to give credit again.

Speaker #3: You're in defenses defensive and you decrease the appetite. So we always want to be always on giving credit with quality but with the clients are more resilient.

Speaker #3: Always looking at the long term. But I always say when we see the market growing irrationally we always need to make a decision. We lose the market share or if we are going to lose market share our money we'd rather lose market share.

Gabriel Amado de Moura: I always say, when we see the market growing irrationally, we always need to make a decision. We lose the market share, or if we are going to lose market share or money, we'd rather lose market share. This is the adjustment of the portfolio. Thank you, Renato. Daniel Vaz, Safra, the floor is yours. Good morning, Gustavo, Milton, Gabriel. Congratulations on the results, the stability, the cost of risk. A bank that is always predictable and stable. I wanted to go back to my question, efficiency indices. We've heard with Milton. I wanted to understand the management of the cost. I hope that is very far away from that, but there is a scenario where your revenue growth, single-digit, how much management could you have a cost contingency to keep the ROI? What limits the cost?

Milton Maluhy Filho: I always say, when we see the market growing irrationally, we always need to make a decision. We lose the market share, or if we are going to lose market share or money, we'd rather lose market share. This is the adjustment of the portfolio.

Speaker #3: So, this is the adjustment of the portfolio. Thank you, Renato. Now, Daniel Va, Safra, the floor is yours. Good morning, Gustavo, Milton, Gabriel. Congratulations on the results.

Gustavo Lopes Rodrigues: Thank you, Renato. Daniel Vaz, Safra, the floor is yours.

Daniel Vaz: Good morning, Gustavo, Milton, Gabriel. Congratulations on the results, the stability, the cost of risk. A bank that is always predictable and stable. I wanted to go back to my question, efficiency indices. We've heard with Milton. I wanted to understand the management of the cost. I hope that is very far away from that, but there is a scenario where your revenue growth, single-digit, how much management could you have a cost contingency to keep the ROI? What limits the cost?

Speaker #3: The stability, the cost of risk, the bank that is always predictable. And stable. I wanted to go back to my question. Efficiency indices we've heard with Milton and I wanted to understand the management of the cost is I hope that is very far away from that but there is a scenario where your revenue growth single digit how much management could you have a cost contingency to keep the ROI?

Speaker #3: What limits the cost of cost isn't more institutional regulatory or simply is a deliberate choice of speed of investment crossing with your revenue and looking at what we are doing now.

Gabriel Amado de Moura: Is it more institutional, regulatory, or simply is a deliberate choice of speed of investment crossing with your revenue? Looking at what we are doing now, you have a review of footprint. How much up ahead that has AI applied to your business? Thinking about what was done from now on, now you have 100% support of AI, or do you still deflate that, or is that being supported and. Well, thank you. Thank you, Daniel. Thank you for the initial comments. Well, I'm going to see the glass half full. The comment that I wanted to do is, the first cost is what is in our hands. Of course, the revenue, we have a production, which is the mechanical, the portfolio. When I look to the future, the revenue is uncertain. It depends on activity, it depends on delinquency, and so on.

Daniel Vaz: Is it more institutional, regulatory, or simply is a deliberate choice of speed of investment crossing with your revenue? Looking at what we are doing now, you have a review of footprint. How much up ahead that has AI applied to your business? Thinking about what was done from now on, now you have 100% support of AI, or do you still deflate that, or is that being supported.

Speaker #3: You have a review of footprint but how much up ahead that has AI applied to your business. Thinking about what was done from now on and now you have 100% support of AI or do you still debate that or is that being supported and well thank you.

Milton Maluhy Filho: Well, thank you. Thank you, Daniel. Thank you for the initial comments. Well, I'm going to see the glass half full. The comment that I wanted to do is, the first cost is what is in our hands. Of course, the revenue, we have a production, which is the mechanical, the portfolio. When I look to the future, the revenue is uncertain. It depends on activity, it depends on delinquency, and so on. The cost is under management. We decelerated importantly with the cost of the growth without foregoing the long-term view. We are never going to kill the future.

Speaker #3: Thank you, Daniel. Thank you for the initial comments. Well, I'm going to see the glass half full. Comment that I wanted to do is the first cost is what is in our hands.

Speaker #3: Of course the revenue we have a production which is the mechanical the portfolio and when I look to the future the revenue is uncertain it depends on activity it depends on delinquency and so on.

Speaker #3: But the cost is under management. We decelerated importantly with the cost of the growth without forgoing the long-term view. We're never going to kill the future.

Gabriel Amado de Moura: The cost is under management. We decelerated importantly with the cost of the growth without foregoing the long-term view. We are never going to kill the future. We are always going to generate value for the clients investing in experience, digital experience, and delivering a bank that is ever better for our clients. Opening new businesses, doing new fronts, all of that we are doing, but we can do both. We can invest and opening the space for that investment. I do not have a silver bullet. It is a series of initiatives that Gabriel has done with the executive committee and the bank, a deep work, all the levers, mapped initiatives. That is where we are going, certainly. Of course, if we have technology or any other way of accelerating the process, we will do so. We are careful with the discipline of the tokens.

Speaker #3: We're always going to generate value for the clients investing in experience digital experience and delivering a bank that is ever better for our clients.

Milton Maluhy Filho: We are always going to generate value for the clients investing in experience, digital experience, and delivering a bank that is ever better for our clients. Opening new businesses, doing new fronts, all of that we are doing, but we can do both. We can invest and opening the space for that investment. I do not have a silver bullet. It is a series of initiatives that Gabriel has done with the executive committee and the bank, a deep work, all the levers, mapped initiatives. That is where we are going, certainly. Of course, if we have technology or any other way of accelerating the process, we will do so. We are careful with the discipline of the tokens.

Speaker #3: Opening new businesses doing new fronts all of that we're doing but we can do both. We can invest and opening the space for that investment.

Speaker #3: I don't have a silver bullet. It's a series of initiatives that Gabriel has done with the executive committee and the bank. A deep work, all the levers mapped, initiatives—so that's where we're going.

Speaker #3: Certainly. Of course if we have technology or any other way of accelerating the process we will do so. We are careful with the discipline of the tokens we are never inhibiting innovation how we're going to do the intelligent management and so on.

Gabriel Amado de Moura: We are never inhibiting innovation, how we are going to do the intelligent management, and so on. Efficiency for us is a mantra. It is never as important as it has been now. With the segments that we can win in competitiveness, and we can advance with the market, we have 5 percentage point advances with consistency. We are going to continue to reduce the retail, adjusting the cost of service so we can be more competitive with the Itaú Digital, given all the investment that we have done in technology and transformation of journeys, which allows us to service our clients with the best digital experience. Just, I am going to take a step back. In the last month, we had competitive NPS of 18 points produced by NPS Prism, which shows the competitive NPS for the market for the winner of the digital experiences.

Milton Maluhy Filho: We are never inhibiting innovation, how we are going to do the intelligent management, and so on. Efficiency for us is a mantra. It is never as important as it has been now. With the segments that we can win in competitiveness, and we can advance with the market, we have 5 percentage point advances with consistency. We are going to continue to reduce the retail, adjusting the cost of service so we can be more competitive with the Itaú Digital, given all the investment that we have done in technology and transformation of journeys, which allows us to service our clients with the best digital experience.

Speaker #3: But efficiency for us is a mantra it's never as important as it's been now. So with the segments that we can win competitiveness and we can advance with the market we have 5 percentage point advances with consistency.

Speaker #3: We're going to continue to reduce retail, adjusting the cost of service so we can be more competitive with digital, given all the investment that we've done in technology and transformation of journeys, which allows us to service our clients with the best digital experience. And just—I'm going to take a step back—in the last month, we had a competitive NPS of 18 points, produced by Prisma, which shows the competitive NPS for the market for the winner of the digital experiences.

Milton Maluhy Filho: Just, I am going to take a step back. In the last month, we had competitive NPS of 18 points produced by NPS Prism, which shows the competitive NPS for the market for the winner of the digital experiences. We closed a gap which was 18 points through these years with the investments and the digital transformation. We are ready to capture the benefits of the digital. Gabriel can give you more information.

Speaker #3: We close the gap which was 18 points through these years with the investments and the digital transformation. We're ready to capture the benefits of the digital Gabriel can give you more information.

Gabriel Amado de Moura: We closed a gap which was 18 points through these years with the investments and the digital transformation. We are ready to capture the benefits of the digital. Gabriel can give you more information. I like to answer starting with your question about the result. About the predictability, about the stability. It shows how we are doing things. At the end of the day, it is not difficult to grow the credit portfolio. The consequences of what is later is part of the decision-making process. Having a cost in a way that is sustainable for the clients with a series of investments that we have to do today to create value in the future. The efficiency level is very important. It is an engine of competitiveness of the bank. At the end of the day is the maximization of values.

Speaker #3: I like the answer. Starting with your question about the result, about the predictability and the stability, it shows how we're doing things. At the end of the day, it's not difficult to grow the credit portfolio.

Gabriel Amado de Moura: I like to answer starting with your question about the result. About the predictability, about the stability. It shows how we are doing things. At the end of the day, it is not difficult to grow the credit portfolio. The consequences of what is later is part of the decision-making process. Having a cost in a way that is sustainable for the clients with a series of investments that we have to do today to create value in the future. The efficiency level is very important. It is an engine of competitiveness of the bank. At the end of the day is the maximization of values.

Speaker #3: The consequences of what’s later is part of the decision-making process. So having a cost in a way that is sustainable for the clients, with a series of investments that we have to do today to create value in the future.

Speaker #3: So the efficiency level is very important. It's an engine of competitive of the bank. But at the end of the day is the maximization of values.

Speaker #3: This is what we can do better for our shareholders and our clients. There isn't one initiative. AI is a lever that is important we are implementing we are bearing the fruits all we have initiatives that we're doing at the same time for you to do this it goes through expenses.

Gabriel Amado de Moura: This is what we can do better for our shareholders and our clients. There is not one initiative. AI is a lever that is important. We are bearing the fruits. We have initiatives that we are doing. At the same time, for you to do this, it goes through expenses. The AI expenses in the bank will increase, but it generates efficiencies, will generate revenues. It is not different from all the transformation we had with cloud before. It is expenses that increase, but you generate the development of the products for the efficiency of the processes in the bank as a whole. The answer of Milton is very complete, but we are doing the best that we can do with the times that is sustainable, and we can generate value for the shareholders. Thank you.

Speaker #3: The AI expenses in the bank will increase, but it generates efficiencies and will generate revenues, so it's not different from all the transformation that we had with cloud before.

Speaker #3: It's expenses that increase but you generate the development of the products for the efficiency of the processes and the bank as a whole. The answer Milton is very complete but we are doing the best that we can do with the times that we that is sustainable and we can generate value for the shareholders.

Speaker #3: Thank you. Great. Thanks, Gustavo. I'm Milton Gabriel. Thanks for the call and taking my questions and congrats also on the strong results as usual.

Gustavo Lopes Rodrigues: Now we are going to switch to English as we have Tito Labarta with us from Goldman Sachs. Tito, the floor is yours.

Tito Labarta: Great. Thanks, Gustavo. Milton, Gabriel, thanks for the call, and taking my questions, and congrats also on the strong results as usual. I also want to ask you a little bit about the industry, your position in the industry. You're delivering about a 26% ROE in Brazil at a time where a lot of your incumbent competitors are struggling to do double digits, right? There's concerns about a credit cycle, growth slowing, high interest rate environment. How do you think about that competitive dynamic? Because that could create some incentives for some irrationality, perhaps from some of your competitors to try to improve their position relative to yours. We saw maybe some pressure on fees, maybe that's related to competition, but how do you think about the competitive dynamics?

Speaker #3: I also want to ask you a little bit about the industry—your position in the industry. You know, you're delivering about a 26% ROE in Brazil at a time where a lot of your incumbent competitors are struggling to do double digits, right? And there's concerns about a credit cycle, growth slowing, and a high interest rate environment.

Speaker #3: And how do you think about that competitive dynamics because that could create some incentives for some rationality perhaps from your some of your competitors to try to improve their position relative to yours you know and we saw some maybe some pressure on fees maybe that's related to competition but how do you think about the competitive dynamics we also recently saw there was an index that ranked you as one of the top two banks in Latin America in terms of AI you know on the one hand I think the leaders globally typically increase the gap relative to the laggards right is that a scenario that we're seeing or could competitive dynamics change right now and could they close the gap to some extent how do you see given where we are in the cycle given your position and given where your competitors are today your ability to sustain these levels of profitability and maybe some of the risks to that thank you.

Tito Labarta: We also recently saw there was an index that ranked you as one of the top two banks in Latin America in terms of AI. On the one hand, I think the leaders globally typically increase the gap relative to the laggards, right? Is that a scenario that we're seeing, or could competitive dynamics change right now, and could they close the gap to some extent? How do you see Given where we are in the cycle, given your position, and given where your competitors are today, your ability to sustain these levels of profitability and maybe some of the risks to that. Thank you.

Speaker #3: Thank you, Tito. Good to see you. Thank you for your initial comments. So, it's important to state at the very beginning that we have many competitors in all the segments that we operate.

Milton Maluhy Filho: Thank you, Tito. Good to see you. Thank you for your initial comments. It's important to state at the very beginning that we have many competitors in all the segments that we operate. If you go to the wholesale business, you have Itaú BBA, then you have incumbent competitors, other competitors for all the rankings and competitors for credit, for cash management, for derivatives, for FX, for everything. You go to the wealth management, then you have other competitors, for investments, for asset management, so on and so forth. This is the same rule that applies for all the other segments. Okay? When we talk about competitors, I think the first comment I'd like to say is that we have a huge respect for all of them. I think all of them are doing their homework.

Speaker #3: So if you go to the wholesale business, you have Itaú BBA, then you have incumbent competitors, and other competitors for all the rankings, and competitors for credit, for cash management, for derivatives, for FX, for everything.

Speaker #3: Then you go to wealth management, then you have other competitors for investments, for asset management, and so on and so forth. And this is the same road that applies for all the other segments.

Speaker #3: Okay. So we have when we talk about competitors I think the first comment I'd like to say is that we have a huge respect for all of them.

Speaker #3: And I think all of them are doing their homework. Everybody trying to compete to be more competitive in the long terms making their investments trying to grow.

Milton Maluhy Filho: Everybody trying to compete to be more competitive in the long term, making their investments, trying to grow. Everybody has a budget, everybody has a board, everybody has incentives. This is life as it always was. We have to segment a little bit to understand how, I would say, competitors behave. First of all, you're right. We've been able, fortunately, to deliver two digits and a strong 20-plus return on equity in the last years. We are always trying to deliver the best value creation for our shareholders. It depends a lot of cost of equity that today we pretty much set at 1475. This is where we believe our cost of equity is set. Okay? Whenever we are generating, 1475 plus, we are creating value to the shareholders.

Speaker #3: Everybody has a budget. Everybody has a board. Everybody has incentives. So this is life as it always was. But then we have to segment a little bit to understand I would say competitors behave.

Speaker #3: First of all, you’re right. We’ve been able, fortunately, to deliver double digits and a strong 20-plus percent return on equity in the last years.

Speaker #3: And we are always trying to deliver the best value creation for our shareholders and it depends a lot of cost of equity that today we pretty much set at 1475.

Speaker #3: This is where we believe our cost of equity is set. Okay. So whenever we are generating 1475 plus we are creating value to the shareholders.

Speaker #3: If we are operating there and less than that we are deploying capital in the wrong way. So this is the discipline we have. It's true that whenever you need to show some results you try to grow fast and grow in portfolios and to underwrite credit in a rational way we wouldn't be doing that because I believe this is not sustainable.

Milton Maluhy Filho: If we are operating there and less than that, we are deploying capital in the wrong way. This is the discipline we have. It's true that whenever you need to show some results, you try to grow fast and grow in portfolios and to underwrite credit in a rational way. We wouldn't be doing that because I believe this is not sustainable. Whenever we see some irrationality, and it's happening in some segments, we give one step behind and say, That's okay because it's not sustainable. You know that for a few months you will see that more clear, after that, you will see the market being disciplined again. Why is that? You will show your profits or your revenue growing, but your profit will grow, but your return on equity will be low.

Speaker #3: And whenever we see some irrationality and it's happening in some segments we give one step behind and say that's okay because it's not sustainable.

Speaker #3: And you know that for a few months you will see that more clear and then after that you will see the market being disciplined again.

Speaker #3: Why is that? Because then you will show your profits or your revenue growing but your profit will grow but your return on equity will be low.

Speaker #3: And so the stock will be at the end of the day looking for the capability you have to create value to the shareholders. So this is very very important for your price book and also for your price earnings.

Milton Maluhy Filho: The stock will be, at the end of the day, looking for the capability you have to create value to the shareholders. This is very, very important for your price book and also for your price earnings. The other thing that market will be looking at is the tangible equity of every institution, because the level of leverage you get when you have a small tangible equity, it's a huge leverage. It's not made for make mistake because if you make mistakes in credit, you have just a small portion of your equity really capable to absorb losses. That's why we believe it's not sustainable. Otherwise, you have to raise capital in the market more and more. What we are seeing is that there is irrationality in some segments. This is not enabling us or preventing us to grow.

Speaker #3: And the other thing that market will be looking at is the tangible equity of every institutional institution because the level of leverage you get when you have a small tangible equity it's a huge leverage.

Speaker #3: It's not made to make mistakes, because if you make mistakes in credit, you have just a small portion of our equity really capable to absorb losses.

Speaker #3: So that's why we believe it's not sustainable. Otherwise you have to raise capital. In the market more and more. So what we are seeing is that there is irrationality in some segments this is not enabling us or preventing us to grow we are growing and growing with discipline but when we see that we give a step behind and keep doing the way we believe for the long term.

Milton Maluhy Filho: We are growing and growing with discipline. When we see that, we give one step behind and keep doing the way we believe for the long term. This discipline is key for the long term. When people ask me, What is a vantage different that you see when you look to your market? Is the discipline in allocating capital. I think this is for many years and will be for the coming years, key. We see room to grow, we see room to grow our portfolio. The strategy, the experience, it's not only a matter of price. Clients are looking for better experience, clients are looking for a full bank that offer you all the products. That is competitive, of course, but has a digital journey that is excellent.

Speaker #3: So this discipline is key for the long term. So when people ask me what is advantage different that you see when you look to your market is the discipline in allocating capital.

Speaker #3: I think this is for many years and will be for the coming years key. And but we see room to grow. We see room to to grow our portfolios.

Speaker #3: So the strategy the experience it's not only a matter of price. Clients are looking for better experience. Clients are looking for a full bank that offer you all the products.

Speaker #3: There is competitive of course but has a journey a digital journey that is excellent. So this is the way we are offering the bank to our clients.

Milton Maluhy Filho: This is the way we are offering the bank to our clients, and the discipline will be always here. Let's see in the coming quarters. Time is time. Let's wait and see how sustainable are those approaches.

Speaker #3: And the discipline will be always here. So let's see in the coming quarters and time is is time. So let's wait and see how sustainable are those approaches.

Speaker #3: Makes sense. Thanks. Thank you Tito. And now we are going to move back to Portuguese porque nós temos o Eduardo Rosman conosco. Because we have Eduardo Rosman with BTG Pactual.

Tito Labarta: Makes sense. Thanks.

Milton Maluhy Filho: Thank you, Chitu.

Gustavo Lopes Rodrigues: Thank you, Chitu.

Gustavo Lopes Rodrigues: No problem.

Tito Labarta: No problem.

Gustavo Lopes Rodrigues: We are going to move back to Portuguese. We have Eduardo with BTG Pactual.

Speaker #3: Bom dia. Obrigado aqui pela oportunidade. Thank you for the opportunity. Now do ciclo de crédito. Let's go with a credit cycle and see your opinion.

Eduardo Rosman: Thank you for the opportunity. Let's go with the credit cycle and see your opinion. How do you see the system being prepared for a crisis, economic one? The market changed a lot. The companies, the capital markets, they multiplied. For example, the FIDC industry, there is BRL 100 million. That dilutes risk on one side, but it causes changes, we do not see how the capital markets would react to a crisis if they would go to the same direction. The individuals, they have lost a lot of shares. We have platforms. Everybody wants to be a bank today. How do you compare?

Speaker #3: How do you see the system being prepared for a crisis? Economic one. The market changed a lot. The companies the capital markets they multiplied.

Speaker #3: And for example the FIDC industry there is a 100 million that dilutes risk only one side. But it causes changes and we don't see how the capital markets would react to a crisis.

Speaker #3: If they would go in the same direction, the individuals have lost a lot of shares. And we have platforms. Everybody wants to be a bank.

Speaker #3: Every today. So how do you compare with the previous crisis? And how do you see the system for potential crisis? Thank you Rosman. Eu acho que você tocou em.

Gustavo Lopes Rodrigues: With the previous crises, how do you see the system for potential crisis?

Milton Maluhy Filho: Thank you, Eduardo.

Milton Maluhy Filho: Thank you, Eduardo. Thank you for the question. When we see the current scenario, there is a lot of changes. Well, we have the volume of credit with the financial system. We have to look at the banking LFs. Well, the volumes are very relevant. Today, we have at least two Itaús in corporate credit in the system. We've never had capital markets that are so relevant. This is great because the companies, they have access to market, to bank, to credit, long-term operations that in the past were public banks. Now the market can absorb. If we see a relevant crisis of credit, there's going to be relevant challenges than in the past. Last banks and capital markets discussing. We've had a few cases. We've managed to somehow negotiate in a rational way with all the participants, but it's always a challenge.

Gustavo Lopes Rodrigues: Thank you for the question.

Speaker #3: Thank you for the question. Quando a gente olha o cenário atual teve mudanças tiveram. Let me see the current scenario. A primeira delas você falou.

Gabriel Amado de Moura: When we see the current scenario, there is a lot of changes. Well, we have the volume of credit with the financial system. We have to look at the banking LFs. Well, the volumes are very relevant. Today, we have at least two Itaús in corporate credit in the system. We've never had capital markets that are so relevant. This is great because the companies, they have access to market, to bank, to credit, long-term operations that in the past were public banks. Now the market can absorb. If we see a relevant crisis of credit, there's going to be relevant challenges than in the past. Last banks and capital markets discussing. We've had a few cases. We've managed to somehow negotiate in a rational way with all the participants, but it's always a challenge.

Speaker #3: There is a lot of changes. O mercado de capitais passou o volume de crédito do sistema financeiro. Well we have the volume of credit.

Speaker #3: With the financial system. Claro que aí dentro você tem que olhar o que que é LS bancária. We have to look at the banking LF.

Speaker #3: Well the volumes are very relevant. And today we have at least two Itaús in credit corporate credit in the system. And we've never had capital markets that is so relevant.

Speaker #3: This is great because the companies they have access to market to bank to credit long term operations that in the past were public banks now the market can absorb but we're going to see if we see a relevant crisis of credit then there's going to be relevant challenges then in the past less banks banks in capital markets discussing we've had a few cases we've managed to somehow negotiate in a rational way with all the participants but it's always a challenge.

Speaker #3: Second point. Isso é ponto que a gente faz há muito tempo. Regulation is key. And today the amount of players is very high. So you have a market that is supervision the central bank does their work they also have their budgets.

Gabriel Amado de Moura: Second point, regulation is key. Today the amount of players is very high. You have a market that is supervision, the central bank does their work. They also have their budgets. We are in favor of increasing the budget for the central bank because it's the same thing as giving credit. We don't have the structure of Well, you open the market, you don't have a supervision that can follow up on the evolution of the market, not by the speed, but the quality and the limitations, the physical limitations, in fact. That's an important theme that we've discussed. We defend the increase of the budget for the central banks so they can supervision. In the unsupervised, the neobanks, the newcomers, they bring the operations to the balance, but they distribute to the funds.

Milton Maluhy Filho: Second point, regulation is key. Today the amount of players is very high. You have a market that is supervision, the central bank does their work. They also have their budgets. We are in favor of increasing the budget for the central bank because it's the same thing as giving credit. We don't have the structure of Well, you open the market, you don't have a supervision that can follow up on the evolution of the market, not by the speed, but the quality and the limitations, the physical limitations, in fact. That's an important theme that we've discussed. We defend the increase of the budget for the central banks so they can supervision. In the unsupervised, the neobanks, the newcomers, they bring the operations to the balance, but they distribute to the funds.

Speaker #3: And. We are in favor of increasing the budget for the central bank because it's the same thing as giving credit and we don't have the structure of.

Gabriel Amado de Moura: A great deal of the risk goes back there. These are capital markets, but it's a risk. It's almost a shadow bank that we have low visibility to what is inside the FIDCs. When you have a situation of stress, who is the owner of the receivables? These are situations that come up, we are going to have to deal with that. The compromise of revenue is very high. The indicators of delays above 90 are going up. We have to see the data of the market, the level of credit that was distributed in the market is much higher than the market could absorb. Today it's very easy to have a credit card. There is no annual fee. You can have six credit cards. You're not going to pay the fee.

Milton Maluhy Filho: A great deal of the risk goes back there. These are capital markets, but it's a risk. It's almost a shadow bank that we have low visibility to what is inside the FIDCs. When you have a situation of stress, who is the owner of the receivables? These are situations that come up, we are going to have to deal with that. The compromise of revenue is very high. The indicators of delays above 90 are going up. We have to see the data of the market, the level of credit that was distributed in the market is much higher than the market could absorb. Today it's very easy to have a credit card. There is no annual fee. You can have six credit cards. You're not going to pay the fee.

Gabriel Amado de Moura: You create the effect of the sudden death, and then you go from one to the next, and then you leave the bank that is the main one. The scenario and the individuals, SMEs, are very pressured. The level of interest rate is very concerning, and there's difficulty capacity of the companies of investing and paying. The agribusiness has its challenges, perfect storm, the price of commodities, the price of fertilizer, logistics with the war, several signs that the situation worsened at the margin. Now, market is liquid, several actors operating, internal usage coming to the funds, the first market into the market relevant and can generate an impact, and we go through the dynamic of prices. There is volatility and the spreads of credit, but there is important thresholds that are competitive. The market has absorbed. Those that use the window have used it well.

Milton Maluhy Filho: You create the effect of the sudden death, and then you go from one to the next, and then you leave the bank that is the main one. The scenario and the individuals, SMEs, are very pressured. The level of interest rate is very concerning, and there's difficulty capacity of the companies of investing and paying. The agribusiness has its challenges, perfect storm, the price of commodities, the price of fertilizer, logistics with the war, several signs that the situation worsened at the margin. Now, market is liquid, several actors operating, internal usage coming to the funds, the first market into the market relevant and can generate an impact, and we go through the dynamic of prices. There is volatility and the spreads of credit, but there is important thresholds that are competitive. The market has absorbed. Those that use the window have used it well.

Gabriel Amado de Moura: If you need to sell it because of a cash flow, there's going to be a hit that is very big. That's where we're going to have to follow. The scenario worsened at the margin, and we're going to have to see the unfolding of the structural interest rates and the economy activity. We cannot depend on the transference and the public expenses. We need to bring private investments at these levels of interest rates, it's more difficult.

Milton Maluhy Filho: If you need to sell it because of a cash flow, there's going to be a hit that is very big. That's where we're going to have to follow. The scenario worsened at the margin, and we're going to have to see the unfolding of the structural interest rates and the economy activity. We cannot depend on the transference and the public expenses. We need to bring private investments at these levels of interest rates, it's more difficult.

Gustavo Lopes Rodrigues: Thank you, Eduardo. Mario Pierry from Bank of America, the floor is yours.

Mario Pierry: Good morning, everyone. Thank you for the opportunity. Congratulations on the results. Milton, going back to services. As you explained a lot, and there is the review of the guidance, but I need to understand what that has to do with the migration. You've talked about the migration of the clients for the One Itaú. In the revenue, and we're going to have the cross-sell of products, and we have that review of the revenue

Gustavo Lopes Rodrigues: We see that migration occurred, the benefits are not as good as we expected. How do you see that migration and the benefits for the results of the bank? Thank you.

Milton Maluhy Filho: Thank you for the initial comments, no, that's not the explanation. We're very positive with the evolution of the migration of One Itaú that we've done throughout the quarters. First, we concluded the migration. Second, the NPS levels above 80, very strong with a small friction, 99.3% of the clients migrated with a digital experience that is very solid. We managed to get 18 points of NPS in regards to the leader of the digital bank. The new products, more than 20 products launched in the period, with a level of activation that is very strong. Transference of limits, the management of expenses. There is an adjustment of limit and of the credit cards. There is a lot of products that has important results. We quadrupled the volume of accounts in the bank. Over 70% of the clients have three products of the bank.

Gabriel Amado de Moura: We've managed this. The checking account is relevant, here there are opportunities to grow in credit with a client that you knew. There is a relationship with a credit card, you didn't explore full bank. With the Crédito consignado or whatever, that is in the margin with the client. It's in the growth of the portfolio. It's not in the margin of services. Credit card is there, of this product, of this public, in this public that we migrated, we did the de-risking, it affects negatively, we are reducing the big reductionism, it doesn't grow. It's the one that affects marginally this effect with the portfolio of services. One Itaú is doing well. Opportunities for growth in the individual, it's growing very well.

Milton Maluhy Filho: We've managed this. The checking account is relevant, here there are opportunities to grow in credit with a client that you knew. There is a relationship with a credit card, you didn't explore full bank. With the Crédito Consignado or whatever, that is in the margin with the client. It's in the growth of the portfolio. It's not in the margin of services. Credit card is there, of this product, of this public, in this public that we migrated, we did the de-risking, it affects negatively, we are reducing the big reductionism, it doesn't grow. It's the one that affects marginally this effect with the portfolio of services. One Itaú is doing well. Opportunities for growth in the individual, it's growing very well.

Gabriel Amado de Moura: The transformation of this BU, when I do an analysis of the last seven months, it's great work with solid results, quality growth. Everything that we discussed in Itaú Day we've communicated has been executed in an impeccable way, the results are following. We see the profitability generating value, segments that were more deficit. The difficult Itaú Digital is the capacity of growing in the niches with the segments with quality. We asked to get in practice 67% of the initiatives that were mapped are going to be executed until the end of the year. We should do it, the growth should come in the subsequent years. We're very excited about the evolution of the real estate and the individuals where we had structural programs that were very relevant, we've managed to execute it very well.

Milton Maluhy Filho: The transformation of this BU, when I do an analysis of the last seven months, it's great work with solid results, quality growth. Everything that we discussed in Itaú Day we've communicated has been executed in an impeccable way, the results are following. We see the profitability generating value, segments that were more deficit. The difficult Itaú Digital is the capacity of growing in the niches with the segments with quality. We asked to get in practice 67% of the initiatives that were mapped are going to be executed until the end of the year. We should do it, the growth should come in the subsequent years. We're very excited about the evolution of the real estate and the individuals where we had structural programs that were very relevant, we've managed to execute it very well. I'm very excited for the future.

Gabriel Amado de Moura: I'm very excited for the future.

Gustavo Lopes Rodrigues: Thank you, Mario. Now we are getting back to English as we have Carlos Gomez-Lopez from HSBC with us. Carlos, please go ahead.

Gustavo Lopes Rodrigues: Thank you, Mario. Now we are getting back to English a`s we have Carlos Gomez-Lopez from HSBC with us. Carlos, please go ahead.

Carlos Gomez-Lopez: Hello, good morning. Gabriel, Milton, Gustavo. Once again, congratulations on the result and the consistency of the result, which is so difficult. I wanted to ask about one of those things that are unchangeable in life, which is taxes. You differentiate yourselves not only for the higher profitability, but also for being the bank with probably the highest effective tax rate. When you think about it from the policymaker point of view, the system as whole probably is paying less taxes today than they were before, and with the amortization of DTAs, possibly even more. Are you concerned that in the next administration there could be a pressure for the industry to pay more? In that sense, what can you do to protect yourselves, either through a favor ban or something else? Where could you see pressures coming for a higher taxation? Thank you.

Hello. Good morning once again, congratulations on the result and the consistency of the results which is so difficult. I wanted to ask about, uh, 1 of those things that that are, uh, unchangeable in life, which is taxes. Um, you differentiate yourself not only for the higher profitability, but also for being the bank with probably the highest effective tax rate.

But when, when you think about it, from the policy maker point of view, the system has helped probably paying less taxes today than they were before. And with the demo decision of the DTA is possibly even more.

Milton Maluhy Filho: Yeah. Thank you, Carlos. I think first answer of your question is that there is a huge stock in the market of DTAs and tax credit. The DTA and the tax credit is a tax that was paid at a certain moment. You have to deal with that when you go and you move for the coming year. This is relevant. I think at the end of the day, whenever a bank has a situation of tax credit, to avoid having losses in the tax credit that will reduce from your capital base, the first thing that a bank should do is, well, to avoid doing operations that reduce your tax base. This is one thing. The second one is to reduce the JCP. You're not obliged to do 100% of the JCP. You can do up to, but you need to have a positive tax situation to make it happen. I believe banks will need, in a certain moment, to adjust the JCP. The third one is the payout. I think banks have the capability to reduce payout as well to retain more capital if for any reason they will face

Are you concerned that in the next Administration there could be pressure for the industry to pay more? And in that sense, what can you do to protect yourselves, either through February ban or something else? And do you see pressures coming for higher taxation? Thank you.

Gabriel Amado de Moura: You can do up to, but you need to have a positive tax situation to make it happen. I believe banks will need, in a certain moment, to adjust the JCP. The third one is the payout. I think banks have the capability to reduce payout as well to retain more capital if for any reason they will face

Yeah, thank you. Thank you Carlos. Uh, I think, uh, first answer of your question is that there is a huge stock in the market of dtas and a tax credit. So the DT and the tax credit is a tax that was paid at a certain moment or you have to deal with that. Uh, when you go and you move for the coming year, so this is relevant. I think at the end of the day, whenever a bank has a situation of tax credit to avoid have been losses, uh, in the tax credit that will, uh, reduce from your Capital base. The first thing that a bank should do is well to avoid doing operations that reduce your tax base. Uh, so this is 1 Thing, the second 1 is to reduce the ioc, so you are not obliged, uh to uh, do 100% of the ioc. Uh, you can do up to but you need to have uh,

Milton Maluhy Filho: Difficult with the tax credit. The JCP is there. I don't see any discussion about it. It's not only for banks, but it's for the whole industry. It's true that our system, our industry retains a huge amount of capital in the balance sheet. Why is that? Because it's regulated activity. The central bank requires that for you to make the credit and to have a portfolio the size we have, you need to retain capital. This capital that you retain, at the end of the day, has the benefit of the JCP. You have, on the other hand, a very high level of corporate tax rate for banks in Brazil, which is 45%, and there is an increase for financial companies in the consumer finance and also for IPs in the recent years.

A positive text, uh, uh, situation, uh, to make it happen. So I believe banks will need in a certain moment to adjust the ioc. The third 1 is the payout. So I think banks have the capability to reduce payout as well to retain more Capital. If for any reason they will face difficult uh with the tax credit. Uh, but the ioc is there, I don't see any discussion about it. It's not only for banks, but it's for the whole industry. It's true that our um system, our industry retains a huge amount of capital in the balance sheet and why is that? Because it's regulated activities. So the Central Bank requires that for you to make the credit and to have a portfolio, the size we have, you need to retain, uh, capital and this Capital that you retain. At the end of the day, has the benefit of the ilc. But you have in the other hand are very high level of

Milton Maluhy Filho: I think there is no risk of this discussion, because it has to do with the level of capital, and I think banks, at a certain point, they will have to reduce the JCP. It's not our base case. We don't have any issue with that, but I think the market might need to reduce JCP in order to avoid having losses in their tax credit. Well, that will reduce capital. I think this is something that we might see, and this will necessarily increase their effective rate.

Uh, tax uh, corporate tax rate for banks in Brazil, which is 45. And there is an increase for financial companies, uh, in the, uh, consumer fee, Consumer Finance and also for, uh, e IPS, uh, in the recent, uh, uh, uh, years. So, I think there is no risk of this discussion, uh, because it has to do with the level of capital and I think banks at a certain point, they will have to reduce the I will see uh it's not our base.

case we don't don't have any issue with that but I think the market might need to reduce ilc in order to avoid uh uh

Carlos Gomez-Lopez: You don't see any public discussion?

Having losses in their uh, tax credit uh, will that will reduce capital. I think this is something that we might see and this will necessarily increase, uh, their, uh, their uh, effective rate.

Gustavo Lopes Rodrigues: Now we go back to Portuguese and Eduardo Nishio from Genial. Good morning.

Eduardo Nishio: I have a question that is for the efficiency level. I wanted to hear from you, from your standpoint of cost and revenues, if the number of employees is dropping very high, 5.5% in the year, in the branches, we have a drop of 90%. I wanted to know until when this process, where are you in this stage of making your footprint adequate, which is 2,000. Do you see more space for reduction? In the part of revenues, which is difficult to make it tangible, the super app, if you can share with us a few numbers of cross-selling. Do you have those numbers to tell us? The launching of the generative AI with the super app. What is the proposal they expect from this launch?

So, you don't see any. Now we go back to Portuguese, and Edward here from January. Good morning.

Of cost and revenues.

If the number of employees is dropping very high.

5.5% in the year.

And in the branches, we have a drop of 90%. So we need to know until when.

This process. Where are you in the stage?

Of making your foot for an adequate, which is 2000.

Do you see more space for reduction? And in the part of revenues, which is difficult to make tangible—the super app—if you can share with us a few numbers of cross-selling, do you have those numbers?

To tell us and the launching of the generative AI with a super app.

Milton Maluhy Filho: Thank you, Nishio. About the first part of your question, when we look at the number of branches, we always do a review of the footprint from the client onwards. A demand by the branches is dropping. The flow is a fourth of what it was. The pandemic came, there is a digitalization, we are always reviewing our business model. Our value proposition sees how we're going to service a client. What is digital, what is remote, what is in the digital branch, what is in the remote, what is the physical? That is a part of the process. We don't give guidance on the amount of branches or headcount. Naturally, the natural turnover of the bank, as we understand that we can absorb being more efficient and at the same time adjusting the value proposition and the business model for the clients.

What is the proposal they expect from this much about the first part of your question?

When we look at the number of branches, we always do a review of the footprint from the client inwards.

So a demand by the branches is dropping. The flow is a fourth of what it was epidemic. The epidemic came, there is a digitalization and we are always reviewing our business model. Our

Value proposition.

See how we are going to service a claim. What are the digital ways—remote? What is in the digital branch? What is in the remote? What is the physical? That is part of the problem. We don't give guidance.

on the amount of branches or headcount naturally, the turnover natural turnover at the bank as we understand that we can absorb being more efficient and at the same time,

Milton Maluhy Filho: We're going in the first month we did a review, we have a review of the proposal of the value and all of that is being discussed. We have a commitment with the client and the business model, we have to adjust it as necessary. This is what we are trying to do, generating the minimum friction and with the most care. About efficiency, we talked about the super app. Well, the migrated clients, 50 million are migrated. We have 70% of clients with 50% of products, the opening of the volume of accounts is gigantic, which shows our capacity of delivering value depending on the profile of the client. There is a one-size-fits-all. The benefit of integration is not only for the migrated clients, for the shareholders, because the dedicated apps, we have a better experience than the super app.

Uh, adjusting the value proposition and the business model for the clients. We're going in the first uh,

Monthly, we did a review, but we have a review of the proposal of the value, and all of that is being discussed.

So,

We have a commitment with the client and the business model, and we have to adjust it as necessary. This is what we are trying to do, generating the minimum friction. And with the most care about efficiency, we talked about the

Milton Maluhy Filho: When we integrate it, when they are in a super app, they have a hub of credit cards that is much better than what we had before. Now these clients are part of our ecosystem. They are part of the life cycle. They are part of allowing the client to understand the full bank, and it is not mono bank, and we have solutions for the client as they have needs, so that this growth is done, obviously, naturally.

Super app. Well, the migrator clients. 50 million are migrated we have 70% of the clients with 50% of the products and the opening of the volume of accounts is gigantic which shows our capacity of delivering value depending on the profile of the client. So there is a month size. I saw the benefit of integration is not only for the migrated clients, but for the shareholders because the dedicated apps we are, we have a better experience and the super app. So when we integrated, we have a

Gabriel Amado de Moura: We're very excited with the results. Certainly an important growth of the individuals is servicing these clients better. First, we did the foundation of creating the guardrails, the foundation of how we're doing the artificial intelligence to interact with the clients. We have a responsibility, and the institution, we cannot have the model without the protections. We have scalable models at the right price. How can we take the results of the clients in their own benefit? We have to individualize the experience, and we can do that, taking into consideration the DNA of the client. Here with the degree of privacy that the client wants, having a model and without having the knowledge bases well-defined, well, we have the instructions and our policies and our culture.

Milton Maluhy Filho: We're very excited with the results. Certainly an important growth of the individuals is servicing these clients better. First, we did the foundation of creating the guardrails, the foundation of how we're doing the artificial intelligence to interact with the clients. We have a responsibility, and the institution, we cannot have the model without the protections. We have scalable models at the right price. How can we take the results of the clients in their own benefit? We have to individualize the experience, and we can do that, taking into consideration the DNA of the client. Here with the degree of privacy that the client wants, having a model and without having the knowledge bases well-defined, well, we have the instructions and our policies and our culture.

What they are in a super app, they have a hub of credit cards. That is much better than what we have before. So, now these clients are part of our ecosystem. They're part of the life cycle. They're part of of allowing the client to understand the full bank. And it's not mono bank and we have Solutions and and for the client as they have needs, so that this growth is done, obviously naturally.

We're very excited with the results.

And certainly an important uh, growth of the uh, individuals servicing these uh clients better. So first, we did the foundation of creating the guard rails, the foundation, of how we're doing the artificial intelligence, to interact with the clients, we have a responsibility.

And the institution—we cannot have the model without the protections. We have scalable models at the right price, and how can we take the results to the clients for their own benefit?

We have to individualize the experience.

The consideration, the DNA of the client.

and here with a degree of privacy that the client wants,

having a model, and

Gabriel Amado de Moura: The agent at the end has to have the culture of the bank, and they need to have clear guardrails. How do we train these models so they can understand these clients and all the relationship with the bank? AI, without having a full bank in the past is not simple. You're not a one-stop shop. You cannot make decisions making the whole. You give partial recommendations and not the best ones. Two, you don't have the records of data that we have in segments that were always relevant, investment, credit, and so on. That facilitates the understanding of the client in the cycle that they are. If they have assessment with what we have, when can we offer, what should we offer until we get to the transactional? You can have a transaction without involving the human.

Milton Maluhy Filho: The agent at the end has to have the culture of the bank, and they need to have clear guardrails. How do we train these models so they can understand these clients and all the relationship with the bank? AI, without having a full bank in the past is not simple. You're not a one-stop shop. You cannot make decisions making the whole. You give partial recommendations and not the best ones. Two, you don't have the records of data that we have in segments that were always relevant, investment, credit, and so on. That facilitates the understanding of the client in the cycle that they are. If they have assessment with what we have, when can we offer, what should we offer until we get to the transactional? You can have a transaction without involving the human.

Without having the knowledge base for the final, we have the instructions in our policies and our culture, the agent ID, and it has to have the quarter of the bank, and they need to have clear guardrails. So how do we train these models so they can understand the clients?

And all the relationship with the bank. So AI without having a full Bank in the past is not in the back, it's not simple. You're not a 1 sub shop and you cannot make decisions making the whole

You get partial recommendations and not the best ones. Also, you don't have the records of data that we have in segments, where we're always relevant in investment, credit, and so on.

Gabriel Amado de Moura: That will clarify not only the doubts, it's AI for our employees, because it releases time. Sometimes the commercial teams they have to answer a simpler question. The model is going to do that. It facilitates so that the people have three more times contact than before. It has efficiency in the amount of clients in the account load of the teams, how many clients they have to service. It improves the experience because you have a first call resolution that is much better as the doubts are clarified. We're very excited. First bank to launch this with this level of completeness and this amount of data. The models will grow with the clients. We're very excited about the evolution.

Milton Maluhy Filho: That will clarify not only the doubts, it's AI for our employees, because it releases time. Sometimes the commercial teams they have to answer a simpler question. The model is going to do that. It facilitates so that the people have three more times contact than before. It has efficiency in the amount of clients in the account load of the teams, how many clients they have to service. It improves the experience because you have a first call resolution that is much better as the doubts are clarified. We're very excited. First bank to launch this with this level of completeness and this amount of data. The models will grow with the clients. We're very excited about the evolution.

So that facilitates the understanding of the client and the cycle that they, that they are, if they have assessment with them, what we have, when can we offer, what should we offer, until we get to the transactional, so you can have a transaction with that involving the human.

and that will clarify not only the doubts, its AI for our collaborate for employees because it releases time

And sometimes the commercial teams, I asked to answer a simpler question. The model is going to do that if facilitate so that the people have 3 more times contact than before it has efficiency.

In the amount of clients in the account load of the teams, how many clients they have to service and it improves The Experience because you have a first call resolution, that is much better as the doubts are clarified. We're very excited.

Milton Maluhy Filho: The command of the Artificial Intelligence AI, it's a good position, and we are well-positioned in saying that AI was always present in the bank and the brand itself. Now we're going to grow with the clients. It's going to be a game changer in the experience. It takes the organization for a strategy that is AI first, which is very relevant for the future. Thank you, Nishio. Now the last question, Henrique Navarro, Santander. Floor is yours. Thank you. Congratulations on the result. The market has changed a lot. It's not normal to see Itaú with a revision of guidance. The question is, the new guidance, even the breadth of the guidance, somehow reflects this estimation for 2026. In the quick way that the world is changing, what are the lines that are weaker in the guidance?

First Bank to launch this with this level of completeness and this amount of data and the models will grow with the clients, we're very excited about the evolution and the command of the artificial intelligence aie. It's a good position and we are well positioned and saying that AI was always present in the bank and the brand itself.

So now we're going to grow with the client. It's it's going to be a game changer in the experience.

Gustavo Lopes Rodrigues: Thank you, Nishio. Now the last question, Henrique Navarro, Santander. Floor is yours.

And it takes the organization for a strategy that is AI-first, which is very relevant for the future. Now, the last question in the queue—

Henrique Navarro: Thank you. Congratulations on the result. The market has changed a lot. It's not normal to see Itaú with a revision of guidance. The question is, the new guidance, even the breadth of the guidance, somehow reflects this estimation for 2026. In the quick way that the world is changing, what are the lines that are weaker in the guidance? If there is a mistake and an expectation of review, what are the lines that should be more at risk? Looking at 2027, maybe you would agree that the changes that are necessary. In January of this year, the sell side and the banks, we had an expectation of a good recovery of the cycle of credit in 2027. As things are happening, it's not going to work out. I wanted to hear if we should look at 2027 and with a growth of credit that is softer, and we just have to push these banking fees that is weaker for 2027. Giving us some color at the end of 2026, 2027.

for thank you. Congratulations. On the result. So the market has changed a lot. It's not normal to see guidance. And the question is the new guidance.

Gabriel Amado de Moura: If there is a mistake and an expectation of review, what are the lines that should be more at risk? Looking at 2027, maybe you would agree that the changes that are necessary. In January of this year, the sell side and the banks, we had an expectation of a good recovery of the cycle of credit in 2027. As things are happening, it's not going to work out. I wanted to hear if we should look at 2027 and with a growth of credit that is softer, and we just have to push these banking fees that is weaker for 2027. Giving us some color at the end of 2026, 2027. Thank you, Henrique, and thank you for the comments. Last question, but a lot of energy. When we look at the range, it tends to capture well what we imagine for the year.

Even the breath of the guidance somehow reflects this estimation for 2026. But in the quick way that the world is changing what are the lines that are weaker in the in the guidance if there is a mistake and an expectation of review,

What are the lines that should be more at risk? And looking at 27, maybe you would agree that the changes that are necessary—

In January of this year, the South Side, the the south side, and the banks. We had an expectation of a good uh recovery of the cycle of credit in 2027 and as things are happening. It's not going to work out. So I wanted to hear if we should look at 2027

and with the growth of credit that is softer and we just have to push.

Milton Maluhy Filho: Thank you, Henrique, and thank you for the comments. Last question, but a lot of energy. When we look at the range, it tends to capture well what we imagine for the year. We have a guidance, we imagine that we are not going to need to review it, but we are pragmatic to review it whenever we have a better performance at the market. This is a good practice for transparency, we can get to the number that we want. We don't give geographies or a point because it wouldn't be a point, it's a range. When you see a credit portfolio, it will grow reasonably, we have 0.6 in the portfolio. It's in the basis of the last year, we have a selling of the portfolio that was done at the end of the day. BRL 10 billion that are automatic, again, the portfolio works very well. Margin with the client, if we annualize what we have in the H1, is a challenge that we have for the next 2 quarters, certainly.

These banking fees are weaker for 2027. So, can you give us some color at the end of 2026 and 2027?

Thank you, Erica, and thank you for the comments.

Last question, but there's a lot of energy when we look at the range.

Gabriel Amado de Moura: We have a guidance, we imagine that we are not going to need to review it, but we are pragmatic to review it whenever we have a better performance at the market. This is a good practice for transparency, we can get to the number that we want. We don't give geographies or a point because it wouldn't be a point, it's a range. When you see a credit portfolio, it will grow reasonably, we have 0.6 in the portfolio. It's in the basis of the last year, we have a selling of the portfolio that was done at the end of the day. BRL 10 billion that are automatic, again, the portfolio works very well. Margin with the client, if we annualize what we have in the H1, is a challenge that we have for the next 2 quarters, certainly.

It tends to capture. Well what we imagine for the year, we have a guidance.

We have a better performance in the market. This is a good practice.

For transparency. So we can get to the number that we want.

We don't give geographies or a point because it wouldn't be a point. It's a range.

...of credit portfolio. It will grow. The reason I believe...

And we have 0 6 in the portfolio.

It's in the basis of the last year. And

We have a selling of the portfolio that was done at the end of the day, 10 billion raised that are automatic. But again, the portfolio works very well margin with the client. And what

Gabriel Amado de Moura: Today, we are running close to the floor, then the midterm, the midpoint, because of the effects that I commented with the liabilities that are very solid, it grows with a structured operation that has volatility, it might be a difference in the next quarter. The working capital that is very stable and growing, it shouldn't grow at a very relevant way. The margin of assets is growing. I'm not concerned, the margin delivers this. The cost of credit you discussed, I wanted to tell you that a bit to the left, a bit to the right, our best expectation is to be closer than to the midpoint of the guidance.

Milton Maluhy Filho: Today, we are running close to the floor, then the midterm, the midpoint, because of the effects that I commented with the liabilities that are very solid, it grows with a structured operation that has volatility, it might be a difference in the next quarter. The working capital that is very stable and growing, it shouldn't grow at a very relevant way. The margin of assets is growing. I'm not concerned, the margin delivers this. The cost of credit you discussed, I wanted to tell you that a bit to the left, a bit to the right, our best expectation is to be closer than to the midpoint of the guidance.

If we annualize what we have in the first semester, it is a challenge that we have for the next two quarters. Certainly today.

We are running close to the floor, then the midterm, then the midpoint, because of the effects that I commented on with these liabilities that are very solid. So it grows.

With the structured, uh, operations, that has volatility, and it might be different in the next quarter, and the working capital that is very stable and growing, but it shouldn't grow in a very relevant way. And the margin of assets is growing.

Not concerned.

But the margin delivery says, the cost of credit you discussed.

I want you to tell you that.

Gabriel Amado de Moura: Even though if we have these questions, Oh, it's worsening at the margin, maybe there is something implicit. What we've seen in the wholesale that is more challenging in terms of credit, but we've done the provisions. The message that I wanted to make it very clear to you is that first we do the provisions, and then we discuss the profit. It's not from the profit to the provision. If we have to come to a quarter that has a worse result because the provisions were worse, and I will explain the reasons, and we will explain this. The discipline of having the provision balance, we don't forgo. The balance has to be well provisioned, and we're not going to be under provision, either in the individuals or the retail or the wholesale. We're always going to have the discipline of doing the provisions.

Milton Maluhy Filho: Even though if we have these questions, Oh, it's worsening at the margin, maybe there is something implicit. What we've seen in the wholesale that is more challenging in terms of credit, but we've done the provisions. The message that I wanted to make it very clear to you is that first we do the provisions, and then we discuss the profit. It's not from the profit to the provision. If we have to come to a quarter that has a worse result because the provisions were worse, and I will explain the reasons, and we will explain this. The discipline of having the provision balance, we don't forgo. The balance has to be well provisioned, and we're not going to be under provision, either in the individuals or the retail or the wholesale. We're always going to have the discipline of doing the provisions.

A bit to the left a bit to the right, our best expectation is to be closer than to the midpoint of the guidance. So even though if we have these questions, oh, it's working at the margin. Maybe there is something implicit.

What we've seen in the wholesale, that is more challenging in terms of credit.

But we've done the provisions.

And the message that I wanted to make it very clear to you, is that first we do the provisions and then we discuss the uh profit, it's not from the prophet to the provision.

So, if we have to come to a quarter that has a worse result because the provisions were worse.

And I will explain the reasons and we will, uh, explain this so discipline of having the provision balance. We don't forgo.

The balance has to be well provisioned.

Gabriel Amado de Moura: Having said that, our best expectation is to close at the midpoint, close to the midpoint of the cost of credit. The revenue of insurance, we did the adjustments. You see the results. We have a solid agenda as we've seen the level of mobilization high, and the cost is very close to the bottom. When we see the geographies, we have the full year forecast. All of that is giving me a level of bottom line. Bottom line is aligned with the previous guidance. A bit to the left, a bit to the right, but I believe that the bottom line, implicit one, if it had a variation, it's very small. This is what we are seeing. For 2027, very early to say because, once again, the scenario is very dynamic. We're going to start now with the discussion.

Milton Maluhy Filho: Having said that, our best expectation is to close at the midpoint, close to the midpoint of the cost of credit. The revenue of insurance, we did the adjustments. You see the results. We have a solid agenda as we've seen the level of mobilization high, and the cost is very close to the bottom. When we see the geographies, we have the full year forecast. All of that is giving me a level of bottom line. Bottom line is aligned with the previous guidance. A bit to the left, a bit to the right, but I believe that the bottom line, implicit one, if it had a variation, it's very small. This is what we are seeing. For 2027, very early to say because, once again, the scenario is very dynamic. We're going to start now with the discussion.

And we're not going to write that we're not going to be under provision either in the individuals or the retail or the wholesale. We're always going to have the discipline of doing the provisions of having said that our best expectation is to close at the midpoint closer to the midpoint of the cost of credit.

And the revenue from insurance—we made the adjustments.

You see the results. We have a solid agenda as we've seen the level of mobilization High. And the cost is very close to the, uh, bottom. When we see the geographies, we have the full year forecast.

All of that is giving me a level bottom line. Bottom line is a line with the guidance previous guidance.

Bit to the left a bit to the right, but I believe that the bottom line implicit 1, if it had a variation, it's very small.

So this is what we are seeing for 2027 very early to say because once again, the scenario is very dynamic.

Gabriel Amado de Moura: We do the discussions, but we are going to have a good budget for 2027 with a Well, we have the discipline of execution, and we're going to execute the best that we can so we can share with you.

Milton Maluhy Filho: We do the discussions, but we are going to have a good budget for 2027 with a Well, we have the discipline of execution, and we're going to execute the best that we can so we can share with you.

So we're going to start now.

With the discussion. We see the

we do the discussions, but we are going to have a good budget for 2027 with a big, uh,

We have the discipline of execution and we're going to execute the best that we can so we can share with you.

Gustavo Lopes Rodrigues: Thank you, Milton. Thank you, Gabriel. Thank you everyone that took part on our earnings call. Now we close the Q&A session and our Q2 earnings call. Now I'll give the floor to Milton.

Thank you, everyone. I took part on our earnings call. Now we closed the Q&A session and our second quarter.

Gabriel Amado de Moura: Thank you, Gustavo. Thank you, Gabriel. Thank you very much for your participation. We really like this relationship with the investors and with all the stakeholders. We try to open as much as we can the information at a higher level of transparency, predictability for any direction. If we have to adjust below, we have to adjust below. If it's up. We try to avoid surprises. Solid quarter in a very challenging scenario, delivering the results that we've delivered with the level of profitability, efficiency level, and transformation of the bank. With credit indicators and the quality level that we delivered, it's not simple. Really, this is a work of everyone, mobilization level, and a lot of capacity, not only the competency of the teams, but the capacity of navigating the scenario.

Milton Maluhy Filho: Thank you, Gustavo. Thank you, Gabriel. Thank you very much for your participation. We really like this relationship with the investors and with all the stakeholders. We try to open as much as we can the information at a higher level of transparency, predictability for any direction. If we have to adjust below, we have to adjust below. If it's up. We try to avoid surprises. Solid quarter in a very challenging scenario, delivering the results that we've delivered with the level of profitability, efficiency level, and transformation of the bank. With credit indicators and the quality level that we delivered, it's not simple. Really, this is a work of everyone, mobilization level, and a lot of capacity, not only the competency of the teams, but the capacity of navigating the scenario.

Earnings call. Now give the floor to Milton.

Thank you Gustavo. Thank you Gabriel. Thank you very much for your participation and we really like this relationship with the investors and with all these stakeholders and we try to open as much as we can, the information that a higher level of transparency predictability.

Well, we have to adjust below if it's up up, what we try to avoid surprises solid quarter in a very challenging scenario, delivering the results that we've delivered, with the level of profitability and efficiency level and transformation of the bank with credit indicators and equality level. That we delivered is not simple.

Gabriel Amado de Moura: What brings us this scenario is the discipline of capital allocation creation of value, and long-term view. Discipline is key. Thank you very much. We'll see you briefly in other opportunities, and for the YouTubers that are watching us, the result is made by everyone. Thank you, and we'll see you soon.

Milton Maluhy Filho: What brings us this scenario is the discipline of capital allocation creation of value, and long-term view. Discipline is key. Thank you very much. We'll see you briefly in other opportunities, and for the YouTubers that are watching us, the result is made by everyone. Thank you, and we'll see you soon.

Really. This is a work of everyone. Mobilization level and a lot of capacity, not only the competency of the teams by the capacity of navigating the scenario and what brings us.

The scenario is the discipline of capital, allocation creation of value. And long-term view discipline is key. Thank you very much. We'll see. You briefly in other opportunities and for the tubers that are watching us, it's a result. The result is for made by everyone. Thank you, and we'll see you soon.

Q2 2026 Itau Unibanco Holding SA Earnings Call

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