Banco Bradesco Sa American Depositary Shares

Good morning. I am Marcela Noronha, and I'm here live speaking from Cidade de Deus. It's 10.32 a.m. to present the numbers for the full year of 2023 and of Q4 2023. After that, we will have a second topic, our guidance for 2024. You probably read our book and our guidance for 2024. To us, 2023 was a challenging year. It's not the result we would have loved to deliver to you. And the guidance of 2024 falls short a bit. But to us, 2024 will be a year of transition, of transformation at Prodisco. And lastly, the third topic is our strategic plan. Of course, here I'm bringing the executive summary of the plan that we put together in the last 60 days. And we'll present that to all of you, and then we'll be able to debate that during the Q&A. And I will be available to all investors for us to talk later. We already have some meetings scheduled for buy-side and sell-side investors so we can speak about our plans for the next five years in more detail from 2024 to 2028. So now I have the challenge of presenting in the same time that we present our income statement of 2024-2023 to speak about full year. Results, the guidance, and the strategic plan in an executive summary, as I mentioned. So I'll try to do this as quickly as possible so we can have our Q&A. Let's start with our numbers, our results. As you can see, we have an additional number in lighter color. This was the end of the quarter with 4.3 billion. Here, we had an ALL reinforcement for two cases in the wholesale bank. We were a little more conservative in these two cases. We reduced the ratings a little, and that's why our recurring net income was 2.9 billion BRLs. In addition, we had two major non-recurring events, as you can see here in this last topic here on the right of the screen. the provision for the restructuring that we had and the contingent liabilities. I think I should comment on some positive aspects of our income statement. Wholesale ALL was reinforced in the two cases that I mentioned. This is relevant. We have a comfortable coverage level for the wholesale bank this year. We had a reduction of ALL in Mass retail. Just like we're going to show you a reduction in all delinquency ratios. We control the higher delinquency that we had for SMEs and mass retail.

Credit strategy accelerating.

I will show you that this happened for individuals and SMEs. We had market NII recovering, total NPL dropping 50 bps. And here there's another positive point which differentiates Redisco in our positioning. We are a group that has a bank business and also the largest insurance group in Latin America. Our insurance group went to a higher level with an ROAE close to 25% in 2023. Our operating expenses were within the guidance and I'll detail more on our expenses. So moving forward, like I said, we had an inflection of the curve for both individuals and SMEs, individuals going 1.3%, despite a reduction we had in our appetite for risk in 2022, 2023, and also a change of level for SMEs, posting a 1.5% growth quarter on quarter. And we had the write-off of a well-known case which happened in the end of 2022, in Q4 of 2022. We should call your attention to our average daily production. In the second half, it grew because we changed our credit models and credit policy for individuals, which became more restrictive than in the past. Yes, it's true, but we've had new controlled vintages. The same goes for SMEs. We tested models in April. We implemented the new models as of September, and we started to grow again. in the segment of small and mid-sized companies, again, with more controlled credit policies, so we won't have any issues in the new vintages, which are performing really well. As I mentioned, delinquency ratio. We can see all curves of NPL dropping, some for the second consecutive quarter, so we have this portfolio under control. Our coverage ratio grew significantly 265% and NPL creation decreasing. I mentioned these two cases we had in the wholesale bank with total provisions of 10.5 billion bureaus in Q4-23. Moving forward, this is our net interest income, NII. We reduced our risk appetite as I mentioned in the end of 2022 and throughout 2023. And of course, we stopped having new productions for a while. We resumed that more towards the end of the year and continued to grow. We will definitely grow, but step by step with good ventures, both in mass retail and in SMEs. in terms of personal credit, working capital, and other lines that we've been growing. And our market, NII, is a highlight, posting growth in Q4, 0.7 billion bureaus, and good expectations for 2024. We know that this is a line item that is under pressure. I think the whole market is talking about that, particularly in card income. We posted 3.4% growth quarter on quarter. However, we knew. that annual payments for card over time were compromised because we had a structural change here in the market and with free cards. So that impacted card income. But our loan operations grew quite well, as you can see in Q4, because of this resumption that I mentioned. We grew in consortium management and in checking account. We have challenges because of payment accounts, but we continue to work on that to offer better packages. We have a good expectation for capital markets for 2024. As for our operating expenses, I think I should make three comments here.