Banco Do Brasil Sa S/Adr

everyone. I am Janaína Storti, Head of Investor Relations for Banco do Brasil. Welcome to our live streaming on the results for the second quarter of 2024. Our event will be in Portuguese with simultaneous translation into English. And you can choose three audio options, original, Portuguese or English. Here with us today are Giovanni Tobias, our CFO, and Felipe Prince, our CRO. I will start this event with Giovanni bringing the highlights of the results, and then we will go to the Q&A session. I would like to remind analysts that in case you have questions, please indicate through the link that you have already received. I would also like to remind you that a more detailed presentation on the results with comments by Giovanni have been already uploaded in our website yesterday when we released our results. To start, I would like to ask Giovanni to start with his initial remarks and then we will go to the Q&A. Thank you. Thank you, Janaína. Good morning, everyone. We are here once again releasing a result that in our view is quite robust, clearly showing the assertiveness of our strategy, to work very close with our clients, focusing on the improvement of their journey, offering adequate products. Our net income stood at 18.8 billion BRLs, growing 8.5% on a half-year basis. I know that many analysts do not believe in our capacity to grow net income, but we are very confident that we will deliver a high single digits. Our NII stood at 51.3. We are also growing with client NII. Fees and commissions, despite competitiveness movements and digital banks, we have focus on principality among our clients. We were able to grow AUM volume, we also increased consortium, we had increased in the pension funds and all of that generated 17.2 billion BRLs in fee income, growing 4.7% in terms of admin expenses, everything is under control and that allowed us to deliver the best cost-to-issue rate and cost-to-income ratio. And then we highlight the payroll loan, which is the main growth driver in individuals. But for 2025, we will again focus on payroll loans. So we will talk about that. In terms of delinquency, everything is under control. Only 3%, you know, NPO over 90. we generated organic profits that were incorporated into our capital base just to support the growth of our business. Our capital consumption came not only from increases in our loan portfolio, but also many other treasury interactions, taking advantages of the macro opportunities that we had some volatilities, but the bank was quick to act in terms of protection, hatch derivatives, and all of that gave us positive results, but again, demanding a bit more capital. So these were the main highlights of the quarter. And in the benefit of time, we will now proceed with the Q&A. Thank you, Giovanni. So, we'll start the Q&A. As a reminder, your questions can be asked in Portuguese or English. Our first question comes from Daniel Vaz from Safra Bank. Thank you. Thank you. Good morning. Good morning, Giovanna, Felipe, and Janaína. I would like you to elaborate a bit on your strategy in terms of the corporate portfolio. Could you please guide us through the second half of the year for next year? What is your strategy in this regard? I know there is guidance, but growth was quite strong this quarter. And we see this capital consumption with the ventures, hedging and treasury that you mentioned. But we just want to learn a bit more about the development or the performance of capital going forward. Perfect, Daniel. Good morning. It's a pleasure to be with you once again. I think the market, even though it was a bit more restricted in the first half, it also came with opportunities. knew how to navigate through the opportunities, as you said it yourself, on the corporate side, especially related to the capital market transactions. As a reminder, you might recall that we have a consolidated joint venture company, and we rank between second and third place when it comes to CM transactions. We've been originating these operations quite strongly and the market gave us that opportunity. And obviously, you see that on the one hand, once we serve our corporate clients, on the other hand, we have another powerful base of individuals. And then we can also channel that distribution. Therefore, the strategy is the same that we've been mentioning to you. But obviously, given the international landscape, the market is still a bit confused when it comes to the second half of the year. But what you could expect from the bank is that we will take advantage of the opportunities, and these opportunities will turn into full service to the customer needs, and with that, we can promote an adequate capital management and you can work with the outlook of further stability in this indicator going forward, meaning that this will continue to fund the growth of our activities. And if I can just add another point, I think in terms of You know, corporate is working capital, 164 billion BRLs in terms of our balance. I mean, we grew almost 8%. So we also have opportunities and we are working with other structures to help companies in their investment needs. Our investment portfolio is 71 billion. This one in particular grew 22%, which is a significant growth. So we will continue to focus there. And certainly the bank is the largest funder in Brazil. Yeah, our portfolio amounts to 31 billion, also growing almost 24%. So I think these are the main pillars. Now, when we look at mid and large size companies in the segment of micro and small size companies, that's a segment where we are doing some prudential work, assessing the risk. We added another $4 billion of the renegotiated portfolio stemming from the Desenhalla program. But we believe in terms of SMEs, and the Cielo proposal, we want to offer a solution that can add more value to micro and small-sized companies, allowing us to differentiate ourselves and taking advantage of our national capillarity because that would allow us to strengthen our ties with micro and small-sized companies. Great. I have another follow-up. In two years, we see the coverage that goes from 450 to... 505% in the individual's portfolio. Do you think that this is the level that you want to run your coverage or you think that should be another reinforcement? That's a good point, even because we had that 400 and even more in the peak of the pandemic. Precisely because we wanted to face a risk that at the time was unknown. We always made clear that once the situation was normalized, that cost to income ratio would be consumed. And then that would take us to levels that in our view would be adequate. We do not have any target for that cost to income ratio, but in fact, this just reflects the application of our models. But this let us know that the accuracy of these risk management models in all portfolios but more particularly in the corporate segment the output is just a coverage that in our view can give us a good degree of comfort to manage this portfolio to continue to grow and then face any particular delinquency that may come along. So you should expect stability in the corporate segment because we are growing, but again, growing while preserving the equation of adequate risk return. Thank you. Thank you, Daniel. Now I will call the next analyst is Bernardo Gutmann from XP. Good morning. Thank you for taking my question. My question is about your increased guidance in A triple L. What segments do you think would require further provisions? Agro maybe is a detractor. Are there any other segments that concern you? Maybe you could also elaborate a bit more on the agricultural side. How do you see demand and delinquency going forward? Thank you. Perfect, Bernardo. Well, here at the bank, we often say that we have good cholesterol, which is that ALLL that comes from new businesses that we do. Well, of course, there is also the bad cholesterol, and that would be ALLL coming from the delay in transactions. So when you look at our portfolio, you may see that in the individual portfolio, we arrived to where we always said we would land about this portfolio. So we successfully deliver the mitigation risk process in the individual segment. So the A-triple-L that comes from that portfolio is good cholesterol and stems from the expansion of credit, especially with payroll loans. And this can be seen when you look at our vintages of individuals, especially those that came in 2024. On the corporate side, and we've been referring to that for quite some time, that this process had already begun, it's important to clarify that it's mostly concentrated in micro and small companies. A large part of this portfolio has risk mitigators, particularly those coming from PRONAMPI. What happens is that this delinquency has to to be in our balance sheet for 180 days until it is honored with FGO. And this generates a delinquency flow. So when maturity date comes, this is reversed. We also showed stabilization of the NPL indicator for corporate, which shows that we are very close to an inflection of the curve. And once that happens, the trend is to have a lower consumption of provisions. I think the greatest pressure that we may estimate for the second quarter, once the guidance is reviewed, comes from the agribusiness market. And then what are the measures that we are putting in place? One of them was a very strong negotiation to allow the bank to have its fair share in terms of control resources to fund the Safra plan or the crop plan. This is the largest volume in the past five years that we receive in terms of resources. And now what is the idea now? All of these resources are already, the funding is already out in the street and going through a regularization process of all of the delinquencies. What do I mean? So in order to run the next crop, growers will need to pay off their debts or whatever is spending. And as here, we have very attractive funding lines to convince them to do that. Today, this has become our focus of attention. This is what our colleagues are doing. They want to promote agriculture. that renegotiation to allow the crop to move forward. And with that, we hope to normalize the NPL rates of agribusiness, which is around 30, 50, which is a historical number. And we hope that all of that, the renegotiations can mitigate, you know, new provision expenses. And as I said, this all came from the delay in payments. Everything is mapped out and mapped out to the little bitty details. So we know what farmers have the capacity to pay off their debts. Our people are already out in the streets doing that work. So we hope to come with better news or good news in the coming quarters. Thank you, Bernardo. Thank you. Thank you all. Well, so now for the next question, I would like to call Gustavo Schroden from Bradesco. Go on. Good morning. Thank you for taking my question. Good morning, Giovanni and Prince. I would like to talk again about allowance for loan losses and also to expand that conversation because there was a change in guidance. And sorry, my camera was not on. So I would like to talk about allowance for loan losses and the quality of the assets. There has been a change in the guidance. So can you please tell me whether there's increase in ALL, what do you think is out of the plan or out of what you had planned early in the year? When we talk to you, I see that there is a more positive feeling towards the second half. And you also talked about some specific points about, you know, FGO tends to improve in the second quarter. What do you think is a bit different compared to what happened in the beginning of the year? Because your ALL is a bit higher in the first quarter. And also, if you could explain the renegotiation and in our view, is a bit higher when compared to past trends and credit recovery, which is also slightly higher. So, if you could please elaborate more on this topic, that would be good. Thank you, Gustavo, for your question. Well, certainly, I think what was not expected was in terms of the agribusiness market, we didn't expect seeing farmers deliberately delaying their payments, just waiting for improvements in commodity prices or exchange rate. I know that volatility has been so large that it's sometimes difficult to run an estimate going forward. So far we had been seeing record crops with pricing and exchange rate extremely favorable for farmers. So when we put together the budget at the end of last year, from October to November, and then we disclosed that information, that was the scenario. But after the first quarter, we started seeing a certain resistance on the part of farmers. And we mentioned that before because we said we really depend a lot because most of these credit facilities are of short term, but as soon as the new harvest season starts, I mean, we will see different conditions and then to get more loans, they have to pay off their past loan. So in terms of agribusiness, what we've seen is that we manage to to see a peak, especially in terms of paying for the crop. And that's a short term, and that's around one and a half, one something. It was 1.2, 1.3, and in the second quarter, that was down to one. But the part related to investments, longer credit facilities, credit lines, it's important to remember that farmers were making investments, expecting improvements, and better harvests are better prices. Therefore, the equation in the field changed. Commodity prices were down. At harvest time, there was a depreciation of the currency. And so, prudentially speaking, the risk has been aggravated. And it's important to remember that the history of average delinquency of 0.5%, it's an all-time low in the history of agribusiness because we were really selling a pool of commodities during the pandemic years. And we've been telling you that, and we even said it in the second half, we had specific campaigns in our network to improve that recovery. Then we deliver a recovery volume which was the highest ever in our history, 3 billion BRLs, 3 million BRLs, because this had to do with our collection effort. Well, certainly the current crop plan was delayed, so we hope to see a better effect in terms of payments. We made even adjustments to the Conexões, that's a program where we connect the network to execute what we see in terms of strategy and so they they should focus to improve you know payments therefore we believe that we will be able to control delinquency we are very comfortable because even with the worsening of risk and and reinforcements in provisions we deliver record results with extremely attractive profitability to our shareholders. And what we are doing now in terms of adjustments is just to help you have a better estimate in terms of what to expect for the entire year of 2024. Because on the other side, we also saw growth because in addition to what we expected, there was growth in margins. We noticed 16.4% growth in margins. there is the Patagonia effect, but it's not so significant because if I exclude Patagonia from the margin and I look at the Brazilian NII ex-Patagonia, the expression would be 16%. It's not that one adds to the other, but so my margin was very much based on spread of my funding that improved and also credit expansion. But If you look specifically at credit, there is an effect on the margin coming from the agribusiness sector. And in our view, this is a one-off situation, very specific. But as starting this new crop season, we will see a different scenario. Now I'll turn over to Filippi so he can talk a little bit more about recovery and renegotiation. The renegotiated portfolio is growing. It stems from a strategy that we adopted. We were protagonists in the Desenrola program last year. We adopted an expanded view. Given the situation, we also consider the possibility to regularize the operations, not only looking at the target audience of the program, because, in fact, this has full guarantees from the federal government, but there are other audiences that, in our view, also needed to reorganize their debt if they kept their assets in our base. I mean, there's obviously... feeds in our renegotiated portfolio. But this year, I mean, we are still developing a new program, which is called Desenhalla Corporate, and this brings a significant amount. And we are then carrying this situation to other legal entities, clients of the bank. This maintains clients with us and it brings this impact when you see an increase in the balance of the renegotiated portfolio. But all of that was done with a good strategy and we had already considered that this balance, I mean, it was running at very low levels due to this entire process to serve our clientele since the pandemic days. Now, obviously, What makes us believe or to be certain that we will deliver a good performance of this portfolio? This is precisely what Giovanni said, and this has to do with our collection efficiency. We've been constantly telling you about our diligent search to improve performance. For strategic reasons, we do not we do not give out active portfolio because the economic gain is lower than what I gain in terms of costs with our own professionals doing the collection. And at the same time, I keep the client active with us. This performance was quite favorable in the second quarter. We could even say that mainly due to two cases in the wholesale segment, It will not be maintained at this level, but you should expect both in the third and fourth quarter a credit recovery performance higher than our historical numbers, which was about $2 billion every quarter. Therefore, we are very confident and safe. We have everything that it takes for a professional management of that portfolio. We have capacitated professionals, collection models that have been perfected on an ongoing basis. We have a WhatsApp robot for renegotiation, which is a reference in the market. So all of that. allow us to believe that the balance, Gustavo, just to be very realistic, the balance should be maintained at this level, but with great collection efficiency, we will improve our performance quarter on quarter, not at the level we have today, but maybe in the middle of the way, between two and this number three that we delivered in the second quarter of 24. Very good. That's very clear. Just to add a bit more. So from what you're saying, a higher recovery level. And I know that there will be a certain accommodation and you see a better delinquency environment. So the ALL in the second half should run below the numbers that you mentioned. you mentioned, so it will be more to the lower part of the guidance you gave? Well, we are targeting the middle of the guidance, so you should expect a similar level. If I repeat $16 billion, I am looking at the $32 billion, so are we talking about $8 billion per quarter, give or take? Because our expectation, our initial expectation, Gustavo, is that in fact we wanted to reach the peak and turn the curve to do less in the second quarter. But then we realized that it wouldn't be like that. Because in addition that we are growing, that will be the good cholesterol. We have to have provisions as my portfolio grows. But I still have some other portfolios that I am managing, particularly the agribusiness segment, in particular the investment lines. That's where the delinquency hit one and a half. I mean, the cost of the crop is now better, you know, lower, but we have to work with the micro and small size companies. So if we remain at eight or eight and a half, just to run a very simple math here, this is what you could probably expect in the second half. Thank you. That's very clear. And thank you very much for all your answers. Thank you, Schroeder. Our next question comes from Ricardo Bushpigo from BTG. Good morning. Thank you for taking my question. I would like to understand how much of delinquency and provisions in the SME segment should benefit from the prenup guarantees and when do you expect them to be put in place. And my second question is, we saw that there was a drop in delinquency quarter on quarter, there was some pressure, and the commercial funding was more pressured because of a lower SILIC rate. Could you please comment on the performance of that line going forward? And what will be the performance of SILIC rate in the next quarters? Do you think that this funding margin would continue to be under pressure? Perfect, Ricardo. Okay, let me start because this is a very objective question. Pronumpy, especially during the pandemic years, was hired for a specific window of time. And so you have specific maturity days, and as a consequence, you recover ALL in specific dates. But as we begin to bring this portfolio to a normal rollout, The number, I mean, 500 million every quarter coming from provision recovery. That stems from PRONUMPI. Now, if you could repeat the question about the NII, I think I couldn't hear your audio very well. Maybe you could repeat that. We saw that client NII was down quarter on quarter. There was a pressure coming from client mix and there was a pressure coming from the commercial funding with the SELIC lower rate. So I would just like to understand what you see going forward in case we see cuts on the SELIC rate, whether that commercial funding margin wouldn't play against you or would still be under pressure. Okay. First of all, we work for the rest of the year with a SELIC rate at about 10 and a half. Well, certainly, and I always say that we are very free in terms of assets and posts in liabilities. In terms of liabilities, there's part of it that contemplates savings and other escrow deposits and the 6% fix. But as SELIC rate goes down, it puts pressure on my spread of funding. But on the other hand, it makes it cheaper for me to remunerate other time deposits and the lines of time deposit. What we notice, and I know that many analysts are saying that my client NII is not good. There are two aspects that should be taken into account. Well, first of all, we saw a drop in my funding expenses. This is positive because of the drop in SELIC rate, and this is positive as well. So as we are focusing in growing, lines of higher returns, keeping an adequate equation of risk and return, that's positive. But looking in the long run, I would like to ask you to go back to when we announced the 23-24 crop season. In that season, that's when we received the lowest equalizable resource to fund the rural crop. And we had to advance in our market funding to be able to serve our clients' needs. In a way, this puts pressure on client NII. But this is something that is in the past, because now with the new crop season, and this was also published, it was the largest one. And this allowed us to get to a different level and even you know, increase the spread for these lines. I think some of you saw that. So we should expect an improvement in client NII because there are two factors here. There is one factor when I specifically look at resources or funding for agribusiness that came with a more, you know, compressed margin. because we had less access to equalized resources that would help to mitigate that because from now on this will be corrected with this new crop plan that was recently announced. And there is another point. You notice that there was an increase in delays and then we increased provisions. Because of that, the transactions that are delinquent over 60 days, I mean, people usually look at NPL over 90, but those that are over 60, that also has an impact on my margin. But since I do not do active portfolios, I put that on my profitable asset portfolio. On the other hand, We have a very robust NII, 60 million, looking at half of the year. We will deliver a higher margin when compared to last year. That's why we review the guidance. But as we do that managerial analysis, it's important that you have that in mind. What happened with the lower resources that we received before and how this impacted now. But from now on, we are receiving a lot more equity equalizable resources, and this will improve our client NII. Ricardo, if you allow me to add to that answer, I always like to suggest that you look at the margin on the accounting side, because there are some variations in terms of market NII and client NII. And there is also a liability NII that flows into the market NII that could be client NII. So there are some methodological adjustments in our view in order for you to conciliate the relationship between assets and liabilities. I think you should... Best look at that line. You're looking at our credit revenue and the performance in the past quarters. Giovanni said that it's an important element that will impact the spread of the agro portfolio in the next cycles. And this supports, you know, the growth of the NII with credit operations. Our credit cycle is growing in a more defensive way. So you see us growing our payroll, loans portfolio, and agro is an important part leverage to grow the portfolio. But at the same time, we see some opportunities that begin to appear for us in the second half of the year. Also looking at non-payroll loans, even the credit card portfolio that has presented a reduction given the strategy of risk, well, We see now opportunities to resume growth in that credit card portfolio. And this, you know, feeds into the margin. So that's why it's important that you look at the revenue of credit operations. Our treasury results, we expected a reduction due to the cash effect. Now we see a more stable SILIC rate, which brings a better performance together with the volume because we saw some growth in this quarter. This compensates because when you look at credit revenue and reduction in funding expenses, we have the compensation of a lower treasury. And there is another very specific element when it comes to funding. And this is our exposure of about 50% of savings and escrow deposits, which remunerate the same way. So if Selic remains above eight and a half, that brings some pressure in terms of funding costs. So this reduction is more limited, even in a scenario of lower SELIC. So we should see some contribution here, but a bit lower going forward. But if you look at the overall picture, it's just what I said. We have, you know, a financial revenue in terms of credit funding that support treasury effect that is lower from now on. We had a good delivery from Patagonia Bank, which is included in this view, both accounting and managerial, and impacts fully market and AI. But when you break it down, you can see that line by line. even in the reduction in the Treasury result that we saw this quarter. But even then, it's a very important contribution. There were 4 billion until the beginning of the half year. And we still expect a positive contribution for Patagonia in the second half, but maybe at a lower level than what we experienced in the first half, given the moves in Argentina, you know, the positions of exchange of bonds or securities that the bank is doing. But even then, a very important position. Therefore, we reinstate our capacity to sustain and grow our NII, looking towards the next quarters. And again, also looking at the accounting NII. Because it's difficult to believe, you know, my NIM is 5. It went from 4.7 to 5. So we don't see any problem. I mean, even if on a quarterly basis you say, okay, well, you and I will say the trend is here or there. I mean, we don't see that. Much to the contrary. Very clear. Thank you. Thank you. Now, moving to the next question, I would like to call Renato Meloni from Autonomous. Renato, you have the floor. Good morning. Thank you for taking my question. I would like to have some more visibility on the guidance of NII, how much that came from an expected better result from Patagonia and how much of it came from other elements. If you could elaborate a bit more on your net, client NII. And what is the exchange assumption that you're using for Patagonia? And if there is another major depreciation of the exchange rate, whether that would have an impact on your NII? Thank you. The assumption we are working with is that we are generating more spread in the agro portfolio, as I said at the beginning. We managed to get a higher volume of resources when compared to the previous crop. And the new crop is beginning just now. Until, I mean, to August 5th, we already made available 5 million. So it's a better spread. We shouldn't expect any growth yet. In addition, we have some very tactical strategies in our treasury with derivatives, transactions, hedges with clients. We are the highest foreign trade funder. It's important to mention that. And all of that has allowed us, given all of this volatility, to generate gains in addition to what we would think of given a less volatile scenario. We are also taking advantage of very specific opportunity. We invested 10 million BRLs in something that is bringing good returns above the SILIC rate for us. This has allowed us to make improvements at a treasury level. In terms of credit as a whole, we We grew in payroll loans and in payroll loans there is also INSS. We grew more than 20% in that specific line. Also, bringing a higher contribution from individuals. We are closely looking at the ,, the market is resuming payroll loans. Then you have higher spreads. And already thinking about the 2025 results, My credit card portfolio is 50-some billion, and one of my competitors has three times that amount. Therefore, we are focusing on that growth because I already solved my onboarding issue, and that was the problem I had, that they brought the delinquency in the credit card portfolio of 10%. And now I did my de-risk, so delinquency explodes now to 5%. It becomes more attractive, given the fact that I invested in technology, systems, and security. Onboarding is now much better. And with all of these things combined, growth comes easily in this line specifically. Now, there is also the possibility of offering non-payroll loans, but with collaterals based on social security, for instance. Yes, this is the new legal framework for guarantees. This was something that already existed, but it was quite questionable. So the new legal framework for guarantees consolidated the possibility to use pension plans as a collateral for loans. So it's just natural for us to take advantage of that because we are leaders in private pension in Brazil. We have $400 billion BRLs under management, and our loan portfolio our non-payroll portfolio is not collateralized. So it's 300 million for a total under management or 400 billion. So 300 million, I guess 400 billion. That means that we have a lot of room to grow and even better while we do that, we maintain good service to our clients because many times clients, decide to call their pension fund to redeem their pension fund to satisfy a one-off situation and sometimes this doesn't bring a very good perception in the relationship with the bank but once you offer that loan you preserve the balance under management while at the same time you provide credit so you have the best of both worlds serving clients and keeping them happy so we I greatly believe in that potential. Renato, just one more thing about the different scenarios that led us to review the guidance. A higher SELIC also contributes to this review because it supports a treasury result that ends up being higher. and also compensates for that small pressure that you will see in the funding expense. It will be a less pronounced reduction, but we have revenue from credit with the growth of the portfolio. The second half of the year is usually more dynamic and more beneficial to the margin, given the other elements that we mentioned in terms of the growth of the portfolio. But this is already contemplated in our review. the contribution from Patagonia, because in this first quarter, it contributed with 4 million. So this was what we were anticipating for the entire year. Therefore, here we have an additional element that can add more margin to this year of 2024. Just to conclude, this assumption does not contemplate any max I mean, it's difficult to make any predictions in terms of the exchange rate, but in our context, we did not consider any new big depreciation. Maybe an important aspect about Patagonia is that one of the main aspects to improve the result, regardless of the macro scenario, because the economy is still in the process of stabilization, was the fact that the government removed the cap of that funding. So Patagonia is a very liquid bank. It has a good reputation in Argentina. It has a very good funding portfolio. It's invested in liquidity facilities in Argentina, so exposure is not so high. I had to remunerate shareholders or clients according to their own quote-unquote Selic rate. So it was part of the program to remove that cap. So today you remunerate on average 40 or 45 of the Selic rate, which is the Argentinian rate. So the spread was great on the side of funding. That also justifies why the Patagonia result in our margin has been higher than what we expected when we did the budget initially, because back then we didn't have any visibility of what would happen. So there was a depreciation at the beginning of the year. We know that the official exchange rate is not enough. There is a gap. Maybe the government would have to close that gap again, but so far, We don't anticipate any impact, even because the contribution to the margin, that growth of 16.4% of the NII, if I exclude Patagonia, I would have a NII of 16%. Understood. Thank you very much. Thank you. Our next question comes from Brian Flores from Citi. Hi, Brian. Hi. Thank you for this opportunity. And congratulations on this new format. It's really cool. Congrats. My question is about capital. I know that you increased the payout, and also you said that it would be for a few years, but we've seen a reduction in CET1, and you talked about your risk appetite, and your risk appetite is quite healthy. Going forward, looking 2025 and onwards, do you think your appetite will be more moderate? What is your view in terms of growth vis-a-vis your capital position or CET1 position and dividend payouts that you're doing? Thank you for your question. Let me just tell you one thing. If my payout were to be maintained at 40%, the estimate is that my CET1, instead of 11.6, it would be 11.67. So it would be seven basis points more. And that makes a difference. So certainly, when we decided to increase the payout, which was a desire or even something that the investors were demanding, you asked us to pay out the capital that was in excess. That was good because it allowed us to think of what would be the optimum structure of that capital. Well, certainly that for us, Banco do Brasil, that we do not access the capital markets all the time because necessarily I would have to have the agreement of our controlling shareholder to participate on a primary offering. But in reality, we built the bank strategy to promote the growth of business in an organic way with the generation of sustainable results. So what's behind this strategic ambition? It's just that I have to generate profits that are then incorporated to our capital base to sustain the growth. When we decided to increase the payout, we also forecasted a more benign scenario where there would be a reduction in interest rates, lower unemployment, a better economic activity with growth, and with that, higher demand for credit. And that was the basis of our strategy. But in reality, we see that we are growing. We are growing our core business. We are generating results. This result is enough to support this growth. And this drop in terms of CET1 is within our predictions in terms of what would happen in this process. This process contemplates. You disperse, you generate results, and then you you then put back the capital that was consumed. The structure is much higher than what would be our prudential. I mean, the minimum required is 8% by the regulating body. Above that 8%, we already put our own prudential, which is in line with our risk appetite that has been approved by the board and the risk committee. And at 1160, I'm still above. So I still have a buffer that allows me to continue gradually reducing as I expand my acid. And it will come a time. when this will rebound. But we don't want it to continue to grow. We have to maintain what we would consider to be the optimum level, close to what would be the prudential. We do not disclose what the prudential is, but I will tell you that it's much higher than the regulatory minimum. So for us, it's not interesting to have a very high CET1. and not a very low one, but we believe that it will be in the range of 11 and this would be a very healthy level and good enough for us to maintain the growth of our business. And then Brian, if you asked me, you asked us for a future view, So we already talked about the operating risk that will be implemented, but there are projections and impacts that in its majority have been considered in this index. We have the issue of IFRS 9 and the 457. We've been talking to FEBRAB and talking to the regulating agencies about the possibility of the deferral. of like 60 months or even a higher term in terms of that change in the provisioning rules. Obviously, this will make capital to oscillate, but as Giovanni was saying, this is within our well-established risk appetite. Therefore, we are quite comfortable both in terms of what is coming on the regulatory side, but also we are comfortable with our capacity to continue funding the expansion of our business. Thank you. Giovanni, I have a very quick follow-on. You said that the conditions were more favorable then, but now the scenario changed, and if things are a bit tighter in high interest rates, as you said, would it be feasible to see changes in the payout going forward? No, we work with a 45% payout. Unfortunately, I cannot open the window of the bank and just tell whether it's going to rain or it will be a sunny day. I mean, today the Fed is going to cut interest rates or tomorrow the Fed will increase interest rates. I mean, volatility sometimes brings opportunities and we manage how to use these opportunities in terms of our treasury, but we continue to work With the outlook of growth of the Brazilian economy, next year we are working with an end selic of 9.75, for this year 10.50. So we don't work with that outlook that anticipates increases in interest rates. Should we review that scenario? Well, maybe we could review it, but I think the probability is more like a tail possibility. So we are still... you know, gearing our business towards that scenario. Perfect. Thank you. Thank you. Now, we move to our next question from Yuri Fernandez from JP Morgan. Thank you, Janaina. Good morning. I would like to go back to that NII issue. You already gave us some color and you talked about some lines and taking more risks. And the card is something that draws our attention. You lost market share in the past few years. There was also market share that... that was down. If you look at the interest-bearing portfolio, the level is quite high. I think 80% of your balance is transactional. It used to be 75%. And there is the renewal of AutoCard. On the other side, you see Brazilians in debt. And I think it was the number for the industry is plus two and you are minus one. So my question is, what about the growth in the card line? What is your focus? High income? I mean, you remodel the product and that's important that you bring the card back to the margin of the past. I mean, I know, I understand the liabilities, et cetera, but I would like to take a closer look at the individual segment. How do you intend to grow? you know, your credit card portfolio with individuals. And if you allow me a second quick question, it's about pre-V. Maybe, I mean, usually when you look at the future interest rate curve, it seems to be good, and that's good for pre-V. So, if you could elaborate on that pre-V segment, that would be good. Thank you. Thank you for your question. Well, deliberately, we closed that credit card portfolio. And then there was a big discussion about revolving credit, et cetera. And we knew that our onboarding solution was no longer adequate because it brought about a lot of friction. And there were several moments. and that we're launching our new AutoCard platform, but mostly focused on user experience. And because of that, we chose not to focus on credit via credit card, but then offer other, you know, CDC solutions where we grow 9%, for instance. So rather than focus on credit card alone, I know that New Bank, Itaú and other banks, they do focus a lot. I think Itaú's portfolio is almost three times our own credit card portfolio. But I think that's an opportunity. It's an opportunity for us to look. And the brackets A and B, they do not use revolving credit a lot. At the most, I mean, they pay in interest-free payments or installments, or they pay it in full. So we look at it very carefully because the bank went to EEF and we had a lot of losses. Therefore, we decided to step on the brakes and rearrange the product. We invested in technology. We tried to reduce friction in customer journey. We also allowed for a quicker and more agile onboarding in addition to being safer. And so from then on, we were able to offer the card. Not only that, we also wanted to offer funding. One of the things that we launched recently was PIX installments. And you can pay the installments with a credit card because PIX is here to stay. It's a reality. It advanced a lot based on, you know, cash and experiences in the past of TED and DOC. We don't see PIX advancing much with credit cards, but so things are, you know, stable. It doesn't make sense for my partners, for my peers to grow in the credit card portfolio, you know, a lot in the bank. not growing or, you know, declining by 3%. I think that the bank is losing some share and we have to recover that, right? And the other question you asked was, what was about privy? Yes, privy. Once you, okay, if you reduce the mathematical provisions, Well, certainly, this brings some benefits. Do you have the numbers there? Yes. That anticipated result that what we had in the past two quarters, 640 million, and we forecast, according to actuarial analysis, 700 million for the next two quarters. So there is a positive contribution, which was already positive in the first quarter. And now it's even better in the second quarter. Thank you. Thank you. Our next question comes from Mario Pieri from Bank of America. Good morning. Congrats on the results. My question, it's a bit annoying, I would say. When I look at the change in the guidance, you see that your provision was up by 4.5 billion BRLs. If I look at the middle point in the review of NII, it's 2.3 billion BRLs. That means that you expect expenses of an additional $4 billion in revenue or $2.3 billion, but at the same time, you maintain your net income stable between 37 and 40. i was just trying to understand what that what that means do you see any other better lines better than expected or you are looking at a guidance of 37 billion instead of the middle of the guidance well thank you so the question is to put it bluntly where do i get the money to foot that bill, right? Well, please remember that out of that 18.8 billion BRLs, almost 9 billion comes from other businesses. So I have social security, I have consortium, I have many other businesses. that help us to deliver that results of 20 plus percent of return on net equity. So there will be many, many instances that help us to put the bill. well, starting with the assumption that my NII, I mean, I deliver 16.4% growth this first quarter. So if I'm working for a year 10 to 13, so it's just like I would have even a lower performance. But let's wait. We will start a new crop season, and as I was saying, We have equalized revenues now that are higher, and the spreads are better for us as well. Therefore, we believe that we are more conservative now, Mário. So, if you just do a simple math, we don't give guidance of all of the other business lines of the banks. I mean, in simple terms, you would get to $2 billion. But it will come, just rest assured. Also, Mario. when you put $4 billion in provisions, in addition, you are considering the top of the range of A-triple-L. Our A-triple-L, I mean, we've been guiding you to the top. So we go from 30 to 31 and 34. But if we look more to the middle, we see an addition, as we said before, of something very close. I mean, expenses very close to what we posted last quarter. So here we have this difference of 2 billion. In the previous question, we talked about previous results, which also helps us. And Giovanni talked about the other stakes that the bank has in other companies and the possibility of improving the business. It's a bit complicated because not necessarily everything is in the middle. So our admin expenses are slightly down. So this map gets adjusted and it becomes more accommodated so that we reach that increase in net income because our commitment is to grow in the high single digits. So this entire context should be taken into account when we look at the guidance, okay? Great, thank you. Well, our next question is from Tito Labata.

From Tito Labata to from Goldman Sachs. Hi, Tito.

Hi, Janaya. Good morning, everyone. Thank you for the call and taking my question. Actually, a little bit of a follow-up to Mario's question in a slightly different way. But you mentioned NII should improve from here, but provisions may still increase a little bit or at best case kind of stabilize from this level. Do you think that risk-adjusted NII or NII after provisions has room to continue to increase from here? And how do you think about the sustainability, I guess, of the ROE at 21.7% Do you think that's sustainable into next year or beyond? Just initial thoughts on that.

Thank you. Thank you, Tito, for your question. As our strategy to expand growth in the individual's portfolio in these more profitable lines like credit card and non-pay row, this helps to to grow our NII. So, well, certainly I would say that Tito, eventually, what could put our strategy at risk is in case there was a very sudden drop in Selic rate, because that would put pressure on my spread on the liability side, because part of my liability is based on savings accounts, and that's 6% fixed. So Selic would have to be below eight and a half for you immediately increase that liability to 35, because then savings will be remunerated at 70% of SELIC rate. So we have to be very careful. In 2025, we are working with a final SELIC of 9.75. I mean, everything I'm saying is just an estimate. We would have to make adjustments as we go. We believe that, yes, we will be able to maintain this level of return. And we expect to see risk-adjusted margin In individuals, we have the rural side with the new crop season that is coming with higher spreads. So all it takes is for us to control provisions, especially in micro and small-sized companies. We are addressing that in agro. The margin for agro and corporate is already very tight. So it's difficult for you to grow that margin a lot. I mean, you generate more volume to get better gains, and then you control the risk. But now, when it comes to individuals, well, we are still very much concentrated in payroll loans. We will continue to do that. But we are not taking too much advantage of the credit card portfolio as much as we should. I don't know whether you want to add anything else. Well, on the credit side and credit card, as you mentioned, and I think this gives us the opportunity to say that we indeed grew that portfolio throughout the past three, four years, it almost doubled in size. But in the peak of the balance, it still carried many components coming from the digital growth that did not perform. So, but now the portfolio is almost the same. There was a drop of 3%, meaning that it was an equivalent balance. But the basis of that balance, the base is very solid. giving us the opportunity to grow more and to serve our clients in a much better way. And all of that based on the evolution of our models and the increasing use of data analysis and AI coupled with our onboarding process. leads the bank to a different approach in the digital front, but with sustainability. We will bring more clients, we will do more businesses, and we will continue to grow sustainably, always looking at the net margin, and this will contribute with the maintenance of ROE at these levels.

Great. No, that's helpful. So just net net, because when you gave the guidance, the outlook was probably for lower rates than expected on the margin, maybe now have higher rates. Does that net net make you a little bit more positive, actually, because of the higher rates?

Yeah, definitely. When we put this guidance, we were expecting the terminal Selic rate around 925, something like that. So we are now working with a 10.5.

Great. Thanks, Giovanni, Felipe, Janaina.

Thank you, Tito. Well, we'll keep in English. Our next question comes from Nicolas Riva from Bank of America. Please, Nicolas.

Thanks very much, Janine and Giovanni, for the chance to ask questions. I have one question on the perpetual bond, the dollar bond that you still have outstanding, the 8.74%. This is the one that you didn't call in April, but you can still call it in October. You can call it in each coupon payment date. And it's trading above the call price at 102. So I know that you're going to announce the decision, I believe, 30 days before, so around September 15. But Giovanni, maybe if you can just give us your thoughts in terms of how you're thinking about that decision, if it's going to be just purely an economic decision, if you can raise about $1.7 billion of 81, let's say 8%, then in that case, you would call and initiate a lower rate or how you're thinking about the decision whether to call or not the perpetual bond in October. Thanks.

Thank you. This will be purely an economical decision. Given the fact that if the market has an attractive rate, then I can probably call the outstanding amount. On the other hand, I mean, the banks have been calling us, presenting several different proposals, saying that the market is open, but we are still a bit skeptical because since the last episode with Credit Suisse, that chapter has closed. And then other recent events or recent things, the price is even higher than my current price. So in the short run, I think it's difficult to see an improvement in the market by October in terms of opening the opportunity for a call. But if it makes economic sense, we will certainly assess it.

Giovanni, thanks very much for that. If I can do just a quick follow-up. You said... Our target for CT1 is around 11% or we will be comfortable with around 11% CT1. For the 81, you are at 140 basis points at the end of June because you call one of your two burps. Is there a target for that 81? Do you want to be close to around 150 basis points of 81?

No, there's no target at all, OK? Our target is mainly to the core capital. So we are way above what would be our target. And it's way above the regulatory requirement, OK?

OK, thanks very much, Giovanni.

Thank you.

Thank you, Nicolas. Our next question comes from Natalia Corfield from JP Morgan. Hello, Janaina Jovani. Thank you for taking my question. My question is about capital. You already talked a little bit about what I'm about to ask you. We saw a reduction in the capital this quarter. Jovani said in the previous question, he talked about impacts for the coming year. So my question is whether you already know what will be the impact for from IFRS 9 Itaú yesterday, they were very clear and they said that the impact will be very, very minimal. So my question is whether you also see things the same way or you believe that the impact for the bank will be higher than that for Itaú. Perfect, Natalia. This is Filipe Prince. It's a pleasure to talk to you today. There will be an impact, of course, but since we've been working in the definition of the rules, not only the rules among banks, but also with the central bank, therefore we believe that some Measures will occur. Definitely, this is not our base scenario. We will not give the disclosure of the impact, but what I can say is that it will not be significant. to the point that that will change our vision our prudential level to run the bank and our growth strategies will be the same i mean from now on therefore there are still many regulatory issues that are being discussed i talked about that 14 457 that depending on the deferral term it will move the needle for Banco do Brasil, but it will depend on that scenario. We've heard people talk about 36 all the way up to 10 years for the amortization. So this will probably have some impact in our capital provision. But we make our capital projection for five years, and in that time, we will have the opportunity to absorb all of that. But it all depends on some further definitions until we can tell you more about the magnitude of the impact. But as I said, it will not affect the way we run our business. Okay, so probably it will not be any significant impact. Probably not. Well, it depends on what you mean by significant impact. But there will be an impact. But this, I'm looking at my CET1. My capital will be still above our prudential and way above the regulatory capital. This is what we expect, right? Thank you. And this is what we expect as well. but, you know, insignificant impact. I mean, that's not our case. There will be an impact, but nothing that can impair our growth strategy. We are reviewing all the models, the analysis. We are taking a much closer look at that. But as soon as we have some more color about the impact, we will share that with you. We still have some discussions on the regulatory side in terms of how the adoption will be carried on. We are trying to put everything on the table to get more details to bring to you later on. Even because come December, we will have to bring a view of how things will be in 2025. But maybe we can say there will be two digits. Yeah, it will continue to be two digits. Two digits, certainly. And just as we've been saying, we've been talking about operating risk, and the impact was even below what we had told you at the beginning. So this is the same way we're doing now. We are trying to adjust our balance sheet to the new rules that are about to come, but we are still pending some further regulations. Thank you very much. Our next question comes from Carlos Gomes Lopez from HSBC. Carlos, you can speak English or Portuguese? I will try in Portuguese. I have two questions on the legal side. The legal risk in the quarter almost doubled, 35% increase, and in the year, 37% more. I just want to understand what's behind that and what do you see in the future, because that's a major expense for the bank. And the second question is about economic plans. Once again, you have 1 billion in provisions, and that's 4 billion in the year. I just want to understand, because this is not recurrent, because at the end, it seems like this is one of the most recurring things in the bank. So what is the logic behind it, or is it just a one-off situation? Perfect, Carlos. I think these two questions... go together. I think I mentioned something like that to you before. The agreement before FEBRABA and the Supreme Court, this agreement will end next year. And because of that, there is a higher appetite from the requesting parties in terms of making agreements with the banks, because the landscape after the end of the agreement, I mean, both parties already said that they do not want to renew that. The scenario is quite uncertain. And we see this as an opportunity. we've been working to accelerate these agreements. And in addition, the expense related to the outlay of these agreements would have to be lower than the provisions we have. But since I have disbursements that increase month after month and tend to increase by December 25th, I certainly have to adjust my provision to be in keeping with the outlay or disbursement. And as we said in other occasions, we are looking at the inventories and the inventory assumes that I would also accelerate my strategy to sign agreements with the consumption of provision. So maybe in one or another quarter, I may consume something above provision because I generate expenses, but in other instances, I may have a reversal and lower consumption. But the message we want to convey is that this is a scenario that should last until the end of 2025, but everything is mapped out and we are working diligently so that the equation is that at the end what I have in provisions is in keeping with what I have to pay. But the delta T of that, it's a bit more complex because it depends on the Justice Department and the desire of people to fulfill the agreements. Well, all of that for economic plans, right? Yes. Not only economic plans, but the agreement strategy contemplates the entirety of the legal risk. What are we seeing from our models? We are also incorporating evolution of the legal metrics once we evaluate the demands. So eventually, if I expedite an agreement process economically throughout time or to present value, this tends to be beneficial to my balance sheet in the long run. So what do I do? Once I identify the opportunity to accelerate, then we do the agreement. And at first, it brings some additional expenses. But as I was saying, in a timeline, this is economically quite favorable for the bank. Basically, it just stems from this strategy. Okay. So we should expect a strategy to lower provisions, right? Okay, for 2024, 26. When do you think that we could expect a reduction of the legal costs? 2026, I think it's a good date because as you said it yourself, economic plan is the main offender or detractor and we hope to zero out this account by 2025. Thank you. Thank you, Carlos. Our next question is from Mateus Rafaeli with Itaú. Good morning, everyone. Thank you for taking my question. I would like to change gears and ask a question about INSS and payroll loans. Giovanni, I think, said that you are growing 25% a year in that portfolio, and maybe the bank doesn't have its fair share, considering that you have public payroll loans. So do you think that, in fact, this could be a relevant avenue of growth for BB to grow in its individual portfolio? And how are you operating the product to grow more in this cap scenario? And finally, how is your appetite with the auction, the INSS auction that should be carried out by the end of the year? Thank you for the question. In fact, we grew, just to give you a ballpark figure, 17%. our balance is 25 billion if you look at my payroll loan is 33.7 billion so we intend to grow even more i think we we were we had less than 10 percent of this market and we are doing that with active offerings we are taking advantage of portability we even offered a digital solution and the client can even look for the lowest installment payment. He can do all the calculation and receives an offering with a reduced amount of installment from INSS and that's why we grew the balance even though the base was lower but there was a significant increase considering that my traditional payroll loan grew by 10% and INSS grew almost twice that much and we believe there is room for further growth and those that follow that market they are paying close attention we are not going to throw money out the window We've noticed that if you have a well earmarked strategy focus with active offerings, personalized offerings for this segment, offering embedded technology to help in the process of portability, portability is very attractive to us. Giovanni, it's important also to say, because I know that you compare things, our INSS line is digital. and it has no intermediaries. And this in itself brings a competitive advantage in a scenario of interest cap, And that's what we're trying to take advantage of. Obviously, without making any adverse selection, be it in terms of credit analysis or risk modeling, it is rigorously applied to these clients. And obviously, once you combine lower cost of credit and also a lower cost to serve, All of that allows us to grow that portfolio with an adequate net spread. And that's what we've been doing. We are reinstated again. We grew 17% this quarter, but we will continue to grow a lot more. And if you think that we have more than 20% of payroll loans of the country, maybe this is our fair share of this market. And we have the potential to double this portfolio. And the conditions of the moment, notwithstanding the high competition, the current conditions are very favorable and help us to accelerate this strategy. And in terms of the auction, that's what Giovanni said. We will not throw money out the window. If it makes sense and if the risk-adjusted return is favorable, we will. participate in the auction. If, in case the conditions are not favorable, we will work as we've been working so far, which is by attacking the bases of our competitors. And there is one thing that counts very much to our favor, which is our capillarity. and I don't want to contradict myself, our line is digital, but it's also available to be acquired through ATMs, the INSS audience. Most of the time, these people, they like to go to the branch, they like to connect to a person. That's why we now have the possibility of bringing these clients not necessarily being part of an auction process. Okay, we will look at it, we will do the math, and if it makes sense, we will participate, and if not, we will just do business as usual. And that means that we will attack the competition using our strengths to leverage the business. Very clear. Thank you very much. Thank you, Mateus. Our next question now is from Eduardo Nishio from Genial. Good morning. Good morning, everyone. Thank you for this opportunity to ask the last question. I have three very quick points. Prince Giovanni and Janaína. First is about Americanas. I think the recovery plan has been designed, you had a very small exposure, which was already written off. How are you going to treat that reversal, maybe, and whether this will go through the recovery line, and what will be the timing and magnitude of that operation? what will be the outcome of this case. In terms of the agribusiness, doing some simple math, this could be very relevant in the second half because there was an increase in volume, an increase of your own participation, of your own share. According to our calculations, we are getting to almost 50% of disbursement, which could be interesting in the second half. And finally, or maybe a bit more complicated, about the social security side. During the BBE Seguridade, we have learned that you are aligned to probably anticipate or maybe draw up a contract for the next 1.5 years. So my question to you is whether this is indeed the intention of Banco do Brasil. Let me start and speak about the social security side of BB Seguridade. Let me make clear once and for all, Banco do Brasil, I mean, our concern is How much is the bank maximizing this agreement? Not only in terms of destroying value of Social Security, because this is ours, it belongs to Banco do Brasil. There is no, not even, you know, remote possibility of not renewing the contract with BB Seguridade. We do not want to destroy value because we will, you know, remove value from us and put it in someone else's pocket. But what we've been discussing is that the level of the operating companies, I mean, how much my partner, my foreign partner is gaining more or less than Banco do Brasil, because that product is only sold thanks to my effort and what is in my network. It's thanks to my customer base, it is crucial, and I said that before, how much all of these other businesses added to the bank's result. So, we are discussing it, yes, but with no pressure because it has to be solved or because, you know, pricing of the basic is very bad and so on and so forth. No. This conversation will be discussed in more depth, understanding the history of the partnerships, how much money was put on the table, how much my partner gained on top of me, and how fair is this relationship. And this will certainly benefit BB Seguridade as a whole. Okay, speaking about agro, the agribusiness side, we talked about the relevance of the segment, and you were correct, Nishu. The fact that the negotiation we did this time, it was not just a negotiation. It was a negotiation to be able to have a better offering in the auction of control resources, and this ended in a much higher volume. I mean, financial, in terms of financial volume is the highest in our history, but this will certainly, bring an additional drive to our disbursements. And we believe that this strategy not only, as we were saying before, will help us to regularize the delinquent operations, but this will also allow us to bring back to the bank other people with whom we had relationships for many years. But in the past years, they resorted to the competition. Our strategy is very well drawn up in terms of using resources to promote good payments from clients that are already in our base. So we have a project to reconquer or re-attract clients that went to the competition. And this has to do with your question of because this cropland has the potential to leverage our products and services and maybe insurance. The insurance side is what benefits the most. whenever we negotiate with our clients, given the need the market has of that product. We are very confident that we will initiate a new cycle with great responsibility. It's not the same margin that we had two, three years ago, but we are not even talking about negative margins. We are, I mean, those that are working well, they are making 20, 25% in the field, and that's when That's where we will make progress. In terms of that very specific case, referring to that fraud in the retail segment, we participated in the negotiations very actively. They reached a point very close to what we had envisioned as our objective. And we had even told you that we thought we would have a recovery of around 30%. It will be slightly lower than that, but there is a significant amount already in the recovery account this quarter. due to the fact that these proceeds have been received cash. Our strategy was to privilege cash receivables, I mean, in a recovery plan that made sense, and leave that part of the share being lower. And this is what happened. So there will be a part that we already received or collected, and the other part will be managed in order to potentialize the recovery. But it will no longer be packed to credit, but to the equity performance of the company. And when Prince said that we collect it, it's not posted in the June numbers, but it will be posted in the next quarter. Perfect. Very clear. Thank you very much. Thank you. Well, I would like to conclude our live streaming on this quarter's results. Thank you so much for joining us. And for the final remarks, I'll turn the floor back to Giovanni. Well, I certainly know that this earnings release call, even though we are very proud of the results because it shows the firm execution of our strategy and our full commitment to bringing the best solution to our clients and also having the support of our employees, I know that the market still had questions about several issues. So we want to leave you with a very clear message. We are extremely committed with the delivery of the guidance, and we believe that we will be able to deliver that result. We are addressing the issues that need to be addressed, and we are doing that very transparently. We work together, and we put our fingers where it hurts. That's very bold. boat strategy, but without letting go with the care that we have for the people, investing in technology, recovering the gaps, and in doing what is necessary to generate more returns. And then I hope that in the third quarter, we will be able to bring better numbers and more clarity in this new crop plan. We already deployed some measures to improve NPL, especially among micro and small-sized companies in the agribusiness line, where we had to increase provisions. But on the other hand, when it comes to individuals, we've been very successful. Despite increase in competitiveness, Banco do Brasil has offered very good solutions to our clients, and the numbers are proof of that. So count on us. The IR department is available to clarify possible questions and issues. And certainly, we are always open to talk to you. Thank you. Thank you very much for joining us. Goodbye, and I'll see you soon.