Banco Do Brasil Sa S/Adr

I am Genaína Storchi, General Manager of Investor Relations of Banco do Brasil. Welcome to our video conference to announce the results of the fourth quarter of 2023. Our event will be in Portuguese with simultaneous translation into English, and you can choose between three audio options, original Portuguese or English. Present with me today are our President Tarsiana Medeiros, the Vice President of Financial Management and Investor Relations, Giovanni Tobias, and the VP for Internal Controls and Risk Management, Philippe Pries. We will begin with a presentation of the results, followed by a Q&A session. We would like to remind analysts that questions should be asked using the link provided. Now, to begin, I would like to turn the floor to our President, Tarciana. Good morning. Good morning, everyone. Thank you so much for joining us this morning for another presentation of our results. I would like to apologize for this late beginning because our press conference was a bit delayed. I wasn't able to attend the last earnings release due to sick leave, but I am fine now. And I would also like to emphasize that here, We are a team. I was very well represented by my colleagues, Marco Giovanni and Felipe Prince, at the last event, just as I am very well accompanied by them here today. But we are 125,000 employees of the BB conglomerate throughout Brazil and the world. Together and mixed, we have completed a year of management, delivering excellent results and creating value for society. But before I... Getting to the numbers, I would like to thank my colleagues for this excellent delivery. Today, we are very proud to announce the most impressive annual result in our history. Well, guys, Banco do Brasil posted a record adjusted net income of 35.6 billion BRLs in 2023, a record this year, an increase of more than 11% when compared to 2022. In the fourth quarter alone, that income stood at $9.4 billion, an increase of 7.5% when compared to the previous quarter. Our return on equity was 21.6 percent. A strong Banco do Brasil means support for a robust economy. Our performance enabled us to generate 86 billion BRLs in added value to society. We're very proud of our ability to deliver consistent financial performance, turning challenges into opportunities, even in a very competitive and constantly evolving business environment. All of this is achieved by having advanced banking technology structures in the world and the best employees available in the market. It is very gratifying to be part of this story. The United Nations encourages us even more, having disbursed more than half a trillion BRLs in credit to the various segments of the Brazilian economy in all corners of the country. This amount is very symbolic of what I had said at the beginning of our administration. Granting credit means believing in people. We reconcile our commercial objectives with our public activities, supporting the most diverse sectors of the economy. Our loan portfolio posted a balance of 1 trillion and 100 billion barrels in 2023, growing over 10% when compared to 2022. Remember what I said when I was sitting at this very chair, that our profits would be the exact measure of the benefits we deliver to our clients and society. At the start of our administration, it was very clear to us that we would achieve results in line with Banco do Brasil's size. Now these results can be considered as very high-resolution indications of the success of our business guidelines. We have shown a sequence of consistent results, and this reinforces that we are disciplined in fulfilling our strategic plan. That's why I reinstate that those who follow us closely, they know what to expect from our performance. We are a team, and we play together. Our decisions are taken collegially in statutory committees that include the participation of minority shareholder representatives. Our decisions are technical and always consider the vast capital allocation of capital, and value creation. We are the only Brazilian bank to participate in Vitrine's Novo Mercado, a level of excellence among publicly traded companies. 2023 is a year of great achievements, and I want to shed some light here on how we operate next to Brazilians. Last year, state and municipalities received 20 billion BRLs in 400 operations throughout the country. This amount is higher than the 17 billion BRLs that were granted in the last four years. Most of it was backed by the federal government. We are talking about operations aimed at energy efficiency projects, renewable energy, road infrastructure, including urban mobility, as well as project finance in areas of health and education, for instance. Now I would like to talk a bit about our business with individuals. We were looking for a credit mix with increased participation in lines with better risk-adjusted returns. operated in lines that favor the resilience of our portfolio, which totaled 313 billion BRLs. The performance was influenced by payroll loans. In 2023, We will have been operating in this line for 20 years with the best business journey in the market and immediate release of credit to the client. We are talking about a balance of 126 billion barrels, which corresponds to an increase of 10% in one year. Today, we have 11 million clients. or civil servant retirees. As for companies, we posted growth of 9% in 12 months, reaching 391 billion BRLs in the portfolio balance. In wholesale, we dispersed 290 billion BRLs. In addition to credit, We also have funding through the capital markets, which have also been gaining traction. We are ranked in the top three in operations by Ventures, Equity, and M&A. Another highlight. was approximately 4 million jobs that we were able to preserve through the 800,000 micro, small, and medium-sized companies that have BB loans. All of that brings meaning to our work, and it's yet another sample of the scope of what we do on a daily basis. 97 billion BRLs were released to 281,000 SMEs that benefited. More than 100,000 of them were ran by women. We also took part in the Desenrola Brasil program, which has restored financial dignity to millions of Brazilians. Observing good market practices, the Banco do Brasil conglomerate has renegotiated 26 billion BRLs since the launch of the Desenrola program in a broader view for the bank's clients, in addition to those benefiting from the program. Now, let's talk about the countryside. Earlier this week, I was at the Copavel Rural Show in Paraná, an event that kicks off the circuit of major agrofairs for the year. BB is there offering support to the entire agribusiness production chain, going from family farmers to co-ops in agroindustries. I used to be, you know, a... Farmer's market person. The farmer's market gave me an incredible knowledge of how to get along with people. And I learned a lot about selling and trusting people. BB has all of that. It brings that trust to producers in the countryside. In 2023, our loan portfolio for agribusiness and family farming totaled $355 billion barrels. growing 15% in 12 months. In the first six months of the 2023-2024 crop plan, BB dispersed 120 billion BRLs, up 5.4% over the same period of the previous crop season. Looking back, At the year as a whole, we reached the highest disbursement of rural credit in history. 195 billion BILs were released in more than 612,000 transactions. This represents an increase of 8.4% compared to 2022, of which 22 billion BILs were allocated to family farming, reaching a balance of 61 billion BILs, you know, contracted through physical and digital channels with the specialized advice from our employees. Our portfolio is resilient. Our financing is spread over more than 5,000 municipalities in all regions of the country and for the most fibrous crops. We have mitigators that protect our operations, including against bad weather. Our long tradition in the rural areas bring deep knowledge of agribusiness and family farming, and that makes a huge difference. The results we're presenting here today demonstrate our commitment to shareholders and society. Banco do Brasil's shares were worth R$31.44 at the beginning of 2023 and ended last year at our all-time high of 55.39 cents. And this week, the share price reached 59.60 cents. which represents an increase of 89%, the highest in just over a year among major Brazilian banks. From this perspective of creating value to our shareholders and our clients, I would now like to announce another remarkable and decisive achievement by our management. This week, we took a historical step in our operations in the acquiring market. We decided to to close Cielo's capital in order to be more assertive or to delist, to be more assertive in the way we operate in this market. Our clients need even more competitive products and services. Therefore, we understand that this move adds to our strategy of seeking to be the main customer of our company clients. Having our clients' cash flow, we can better understand their behavior and improve our relationship models. We are confident that the that the public offering we are launching will be a success. The business model and the corporate structure that is being designed allow us to present this improvement in the value proposition to this audience and to offer differentiated negotiating conditions to our clients. And speaking of generating value, in January we launched The Educa Plus Mulher bond in partnership with the National Treasury, and we are the first organization in the world to allow the purchase of a sovereign bond via WhatsApp. This is just one example of how we've been working with modern, simple, and appropriate solutions, whether for investments, loans, or means of payment. We are talking about Banco do Brasil in which the use of data and analytical information is increasingly able to customize the relationship with our clients using artificial intelligence and analytics. There have been more than 1 billion interactions with clients using artificial intelligence and analytics. Payroll loans are another example. Example of how we have been working digitally in the public sector for years, and now we are going to take this expertise from the public payroll low models to the private sector and continue to advance in the INSS or pension funds, where we will be looking at our fair share, adding all the necessary improvements for a smooth and safe journey for both employer and employees. Our range of products and services is supported by cutting-edge digital solutions combined with qualified human financial advice. This digital performance, which is the combination between physical and digital, is also one of our strengths. And the same thing goes for payroll loans. 88% of all of our payroll loans disbursements in 2023 were made omni-channel or digitally in an integrated vision between origination advised by our network and the convenience of our digital channels. I will tell you about some very nice highlight that exemplifies how much we are protagonists on the digital front in the financial sectors. At BB, Open Finance and Mia Finanza Solution already allows clients to see their investments in other banks and operate on the BB app. Another example here is the optimization of our systems and cloud application that allows us to scale hyper-personalization at all points of contact in an increasingly integrated vision of customer service in any channel. Now, looking towards the future, which is already present at Banco do Brasil, I would like to point out that we were the first bank to carry out tests in 2023 with Real Digital, DREX, which will be the next gateway to a tokenized economy. We continue to invest in technology. There will be 3,000 new IT and cybersecurity employees by the end of 2024. Security, efficiency, and innovation are Go hand-in-hand at BB, and this is reflected in the recognition by our clients. In January, the central bank released its quarterly ranking of bank customer complaints. For the sixth consecutive semester, we've been the best-positioned bank among traditional and digital banks. We have the client at the core of our operations, strengthening the Banco do Brasil brand more and more. In addition to this, recognition from our clients. We also received several market awards last year. I would like to highlight that we were considered the strongest brand in the country and one of the three most valuable Brazilian brands in the world. Banco do Brasil was also voted the most sustainable bank in the planet for the fifth time In 2023, we reinforce our consistent actions on ESG issues with the creation of a strategic unit to drive environmental, social, and governance agendas across the bank. We have public commitments and concrete targets on each of these fronts, acting on a voluntary and leading role in corporate sustainability. Over the last year, Representatives of the Bank have actively participated in various fundraising meetings with an intense business agenda. I would like to highlight just a few. In July, we were in Asia and in the Middle East. In September, we went to New York during the week of the UN General Assembly. We also went to the UN Global Compact meetings in Chile and Geneva. We were in Morocco during the IMF agendas, and we went to Dubai for COP28. Banco do Brasil has played a transformative role by offering conscious loans. Our sustainable loan portfolio reached a balance of more than 443 billion BRLs. was granted in credit lines with positive economic, social, environmental impacts. We also have several relevant deliveries in regards to diversity, which is by far one of our strategic pillars. It was this year that we launched our People, Equity, and Diversity Program and Executive Committee, the bank's main advisory monitoring body on the subject. We are working on this in a very serious and structured way. We are doing And the market recognizes our performance. We have a prominent position in B3's IDVIRSA index by acting as a benchmark in diversity. I mean, not only we do our part, but we encourage this in other companies, our suppliers, and our clients. Most recently, the bank renewed the BB2030 commitments for a more sustainable world, which includes objectives in 12 commitments divided into four fronts. sustainable loan, responsible investment, ESG and climate management, and positive impacts on the value chain. We have also become ambassadors of three important UN global compact movements. They lead 2030. Living and dignified wage and race is a priority. We strongly believe that public commitments and concrete targets have the power to transform realities. And that is why, in an unprecedented way and direct way, Banco do Brasil is bringing ESG to our guidance. We are the first bank in the Brazilian market to do so. From 2024 onwards, we will start monitoring estimates for the growth of our sustainable portfolio. We believe that the guidance will bring more transparency to the bank's performance in projects that will contribute to sustainable development and the transition to towards a low-carbon economy. We expect to grow our sustainable loan portfolio by between 5 and 9 percent by 2024. We should also recall that one of our sustainability goals is to reach 500 billion BRLs by 2030. Our CFO Giovanni will go into more detail about our guidance But I just wanted to say that our commitments are bold, but in line with the size of BB's business. We are stating the continuity of our management's committee, which is to support the country's development while being judicious in granting credit.

This is our main characteristic and it is what makes us strong and competitive. At no time have we stopped believing in Brazil and the Brazilians. Now inflation is under control and the long-term interest rate curve continues to decline. This is a combination that allows us to practice prices with good banking technique in the right measure of an adequate profitability to the services we provide. 2023 proved that we can do all this.

And lastly, I would like to highlight our projection for net income between 37 and 40 billion bureaus by 2024, maintaining the principles I announced when I took office and which have marked the management of the company's executive committee. We build the future every day without losing the essence of what makes us Bank of Brazil.