Banco Do Brasil Sa S/Adr

Our CFO, Giovanni Tobias, and our CRO, Felipe Prince. We will start with CEO Tassiana's speech, followed by the question and answer session. Please remember that already for some quarters, we've been providing the video of... of the commented results by our CFO in the night before our call on our investor relations website. So now I turn the floor to our president, Tarsiana. Good morning, everyone. It is a pleasure to be here again to share with you the results achieved in the last year and present our perspectives for 2025. In 2024, we completed two years of our management and reaffirmed our ability to honor what we set out to do, delivering for the second consecutive year on our guidance as a result of the quality and discipline in the execution of our strategy. We delivered our commitments to generate value with diversified operations and responsible credit growth based on the proximity and specialization in digital service to our customers. We also advanced the technology and innovation agenda and consolidated ourselves as the most sustainable bank in the world for the sixth consecutive time. We'll address all of these points in more depth during the presentation. We achieved an adjusted net income of 37.9 billion BRLs, an increase of 6.6% in the year. This action made it possible to pay out more than 85 billion of added value to society. We advanced in loans exceeding 1 trillion 278 billion BRLs at the end of 2024, an increase of more than 15%. We supported our clients, strengthened our leadership, and we're ready to reach new heights, attentive to the challenges and opportunities of the scenario. The balance between our main portfolios built over the years is a strength of BB, and it's the only bank in this industry with such a balance in the formation of portfolios. It was essential for us to go through the year in a harmonious and healthy way, considering the best relationship between risk and return. In loans to individuals, we reached $336 billion in the portfolio, an increase of 7% in the year. And despite all the competition in payroll loans, we have increased our market share to more than 20%. I highlight here our performance in the INSS payroll loan, with a disbursement of $37 billion since we declared that we would seek our fair share of the market. In 2024 alone, disbursement in this line grew by 53%. On our corporate portfolio, we showed significant growth of 18% in the year. We believe in entrepreneurship as the driving force of the Brazilian economy. The portfolio for SMEs exceeded R$ 125 billion, and we evolved in the specialized model for companies with revenues between R$ 15 and R$ 50 million, Thank you very much. especially favoring small companies that supply large ones. Also part of our growth strategy with companies is the disbursements in lines of government programs that have guaranteed funds, such as FTO ProNumpy, FTO ProCred 360 and PIAC FTI, which together reach disbursements of R$12.4 billion in the year. I also highlight the growth in the government portfolio, which reached R$ 78 billion, especially in investment operations, which contribute to the development of the country and are also guaranteed by the National Treasury. Now let's talk about agribusiness, which closed the year with a growth of almost 12%, and which in January already reached the mark of R$ 400 billion. In 2024, we saw the delinquency of this portfolio rise and we intensified our support, remaining close to farmers who seek a seat at the table with us for negotiations. We continue to see an increase in cases of in-court reorganization, which already represent almost 20% of non-performing loans in agribusiness in more than 250 customers. The mechanisms present in the Rural Credit Manual support producers who were impacted by the challenges of the field in the last harvest. We have reaffirmed here our commitment to offer technical and financial support to our partners at all times. Our capital remains at robust level, closing the year at 10.89%. Here, we had an impact from the market-to-market effects on private securities due to the strong movement of the opening of the interest rate curve in the last quarter of 24. As the curve returns, this market-to-market impact tends to recede. We understand that the 11% range is our optimal point where we find efficiency in the use of our capital and support for our growth ambition. In this context of greater volatility and considering our capital plan with a three-year horizon, the Board of Directors established a range between 40% and 45% for the 2025 payout. Within our purpose of being close to our customers, We are focused on offering the best experience, promoting and further accelerating our digital transformation and ensuring business sustainability. In the last two years, we have more than doubled our investment in technology, with advances in the digital journey of our customers and the development of our employees' digital skills. We are reinforcing our agile teams, and I want to highlight here the call for another thousand colleagues still in the first half of the year to reinforce the areas of technology and cybersecurity. They will join the more than 65,000 employees who have already been trained in the past two years in artificial intelligence, data science and other aspects of technology and who are increasingly prepared to innovate. These investments also deepen the use of artificial intelligence and analytics. There are already more than 1,000 use cases in AI, ranging from credit risk models to our CRM platform, which is increasingly more powerful, with hundreds of millions of insights and business recommendations. Thus, our relationship and offers become more fluid and assertive. This platform doubles our business effectiveness, increasing productivity of our sales team. The hyper-customized service that we've been talking about to you for at least two years is reflected in the positive perception of our customers, considering the significant evolution of our service metrics. We achieved the highest NPPs in our history with growth in all segments, positioning us as one of the largest in the industry. Our overall satisfaction is in the level of excellence. These indicators are confirmed by the central bank's ranking of complaints, where we achieved the unprecedented mark of 10 consecutive quarters, with the best result among the main financial conglomerates, which reflects our continuous commitment to excellence in customer service. We are already of reference in how to combine the best of digital with the proximity of human service, and we will continue to reinforce and expand our synergy differential between the channels, such as Ponto BB, which perfectly integrates physical and digital channels in an environment of innovation, business, and reinforcement of BB's brand attributes. The first Ponto BB at Porto Digital in Recife has already received more than 72,000 visitors since it opened, and we have seen a 7% increase in the new customer base. This successful experience makes us believe that having Pontus BB exploring the potential of each region in a customized way is the path to be even closer to our customers, reinforcing our purpose. And when we talk about relationship and proximity, I emphasize that we are farm and expanding specialized service, and our ambition this year is to reach 10 million assisted customers. In addition to bringing proximity and resolution, These customers have a higher principality index with BB and a 10 times higher profitability. BB has always been at the forefront of the creation of high-income service models. Today, we have the network with the largest capillarity in Brazil. We are present not only in large centers, but in cities throughout the country where the generation of wealth and new businesses emerge all the time at an impressive speed. In 2025, we will further strengthen the service to Bibistilo customers. Our focus will be to intensify the proximity and offer of exclusive solutions for this public by expanding the performance of the high Istilo segment to more cities after the success of our pilot program in three capitals. This year, we made strong progress in sustainable business. We were pioneers back in early 24 in declaring the Sustainable sustainable portfolio in our guidance, reaching the high end of the target with growth of almost 13%, reaching R$ 387 billion. We also stood out in the volume of sustainable funding, which exceeded R$ 6.6 billion with investors and technical cooperation agreements with multilateral bodies this year alone. We are leading players in the carbon credit business and we see it as an important line of growth. we have already reached 755,000 hectares preserved or recovered with a goal of 1 million by the end of this year. And we will not stop there. In 2025, Brazil will host COP30 in Belém and you can already expect a performance as great as the bank that carries the country in its name. We have been present at the main forums on the subject from New York to Cali and I'm sure that Belém will be a milestone for an increasingly sustainable world. Now I want to bring you our macroeconomic assumptions, which are important markers in the construction of our projections and ambitions for 2025. The Brazilian economic scenario this year, although challenging, presents elements that allow us to maintain resilient economic activity. The projections indicate GDP growth of 2.2%, reflecting a favorable business environment even in the midst of a context of monetary tightening. The agricultural sector is one of the main drivers of the economy, and in 2025 we forecast a growth of 6% from a record percent and inflation at 5.6%. These factors, combined with historically low levels of unemployment, should lead Brazil to go through 2025 with resilience, mitigation, mitigating the effects of a tighter monetary policy. Based on this scenario, I'd like to share with you our strategic vision and the opportunities we are embracing this year. Banco do Brasil's credit growth will continue to be sustainable and balanced with an origination mix that is consistent with our role in Brazilian society and benefiting from the opportunities of our operations in every corner of Brazil. We will continue to be leaders in payroll loans in all its verticals, with public servants from INSS and private payroll loans, now with the opportunity of eSocial. Now, on non-payroll credits, there are two growth verticals, the first for strategic professionals and the second is on credit cards. on credit for companies with a higher interest rate scenario, we must be cautious in management of our business, and we know how much financial expenses impact the results of companies, especially smaller companies. And that's why we have efficient strategies to mitigate these effects and guarantee sustainable growth. As I mentioned, we also have lines of government programs with emphasis on FTO prunumpi in which we are leaders. As for agribusiness, we see a scenario of normalization of the pace of growth in a context of risk that requires us to make a more prudent stance. We will continue to honor the relationship with our agribusiness customers who have been growing with us and with the country for generations. In the dynamics of revenues and expenses, we will continue to invest in the relationship and proximity with customers with integrated solutions beyond credit. The scenario is constructive for asset management at BB Asset for the growth of consortia and the insurance, pension plan, and premium bonds businesses. I must also mention the movement with Cielo's delisting, where our focus is on the principality of the SME customer with a comprehensive look at their needs. In 2024, we have already put some innovations to work, such as tap-on-phone and contactless PIX payments. And in 2025, we will accelerate this movement. In other words, the group's companies continue to be relevant in the diversification of revenues, acting in synergy and complementarity with our branch. And we'll continue to be strict in controlling expenses without neglecting investments in technology, which are crucial for the modernization of our business. I conclude by thanking each one of our 125,000 employees of the Banco do Brasil conglomerate who built this result and sought this result every day. You were the force that drive the company. And I also thank our customers, shareholders, and partners. Banco do Brasil remains firm, solid, and ready to build an increasingly better future. Thank you very much, and we'll now begin our question and answer session.

Thank you very much, Darcy. We will now begin the Q&A session. Questions can be asked both in Portuguese and in English. And I would like to ask the analysts to just ask one question, please, so that we can have everyone participating here with us. Our first question comes from Danielle Vass from Safra. Danielle, please. Good morning. Good morning, Jenna. Good morning, everyone. Tarsiana, Giovanni, and Prince, thank you very much for this opportunity. I would like to talk about your guidance. You have a long portfolio of 7.5%, and there are some differences. According to the different segments, we have more of individuals and less of ag and corporate. I would like to go over that area. You ended the year at 15% of growth year on year, and I would like to understand what is your focus to grow in 2025. For this portfolio, you can break that down between wholesale and SME, and the lines that you are going into in your guidance. That would be great for us to understand where you aim to get at wholesale loans. Thank you, Daniel. Yes, the growth was significant by the end of the year in our company's portfolios. And here we have SMEs, large and corporate. And we are carrying all of them in there. We did have an increase of over 30%. These are opportunities that we foresaw in the capital market, but it's important to mention that we have a more challenging environment for companies, and we believe that we have companies, for instance, exporting companies that will be benefited, and then they could be working closer to us. We fund the Brazilian markets in exports and about, we are also working very specifically with government lines such as Pernambuco, as Tarsiana mentioned. And we intend to keep that proximity to these clients, but always watching for the risk-return equation, considering really our NII. You saw an increase of our NPS in 2024. We were able to control it. And that's why when you look at the company segment, it's different. But we will see a few companies, especially... ...of the guidance, and that is because of these... important that you have in mind that there is a small share of that CET1 that was basically affected by the volatility that we had in December. If it were not by that, we would have been at 11%. We already discussed that. What would be a CET1 level that could be more sustainable for us? We started 23 with a robust capital level and We were able to increase our payout for 2024, but there were adjustments that would happen in the regulation today. We have more visibility with the 4966, and we have a payout working in the range from 40% to 45%, and 24% at 45%. But we have that vision in the medium term already looking at the next three years and aiming – the CET1 of a balance around 11%. As we generate the organic results, we then will have that flexibility to be able to distribute or to pay out more dividends, and we are also aiming the high end of 45. We have, though, to take into consideration here the rural portfolio. We need to be careful about it. There is the phenomena of... in-court reorganization with around 300 clients with 3 billion rails of impact and this delinquency rate. We are transitioning the balance sheet for incurred loss, for expected loss, so we are being very cautious here. We chose to bring to you this range where we have the flexibility to optimize the capital structure and at the same time correctly pay our shareholders, keeping the the soundness of sustainable results over time. So I don't know if Prince would like to add anything else regarding this topic, but this is our strategy to manage that capital perfect. It's also good to understand how constructive we are. As Giovanni mentioned, we did have the impact of volatility by the end of the year. Obviously, as you realize that the market balanced itself and this balance, of the market brings with itself a recomposition. It rebuilds the capital, and it's very similar to the funding of the 4966 implementation. So we start 2025 with a robust balance sheet, and it's very well reinforced. This transition bill, so to speak, is balanced now. out again, and it comes back with the normalization of the market, both effects and interest rates. And obviously now we are working with our capacity of organic generation so that we can correctly pay out our shareholders as well as to fund the growth of our own activities. So we are very confident that we are starting from a relevant point so that we can run our business as... from Goldman Sachs.

Hi, thanks, Shanaina. Good morning, everybody. Thank you for the call and taking my question. My question is on the provisioning levels and coverage. Just, you know, you mentioned that the 4966 should have about a 4.6 increase in expected losses. Just to put that in perspective, because you've been provisioning a bit less than the NPL formation. Your coverage has been declining to about 170%. How should we think about this Going forward, will the implementation of 4966, should that increase your coverage? And then also just thinking about the NPLs as rural NPLs have gone up, that's impacted the coverage. Do you expect the rural NPLs to begin to improve at some point? So just to think about provisioning, given your level of coverage and the impact of 4966, if you can give some more color on that, it would be helpful. Thank you.