Banco Do Brasil Sa S/Adr

Hello everyone, welcome to another videocast to talk about the result of the fourth quarter of Banco do Brasil. I am Janaine Stott, Head of Relations with BB Investors, and it is a pleasure to be here again with you, together with Giovanni Tobias, our CFO, and Marcelo Alexandre, our specialist in R&D. And to open up our conversation, I want to start by talking a little bit about the gardens, Giovanni. It was a challenging year, but as we can see here on the screen, we reached all the ranges, we were within all the ranges with the exception of agribusiness and here a lot due to the risk environment and the measures that we have been taking throughout the year to control inadimplency. But besides that, I wanted to hear a little bit from you about the composition of profit and your vision of this result.

Well, just making one note here, When she says that we practically hit almost everything in the Guidance, it is important to remember that in 2025 we had three Guidances. When we announced at the beginning of the year what we had as the best expectation and forecast for the year 2025, we did not imagine what would happen in terms of result and mainly in terms of forecast with the implementation of 4966 and also the advance of inadimplency in the agribusiness sector. And that's why we suspended the Guidance, so that we could take a break and understand exactly what was happening, what was the reflection. So, we had that moment to go deeper, to study, to understand and to bring to the market, in the promotion of the semester, what would then be our Guidance, our best vision for the whole year of 2025. And then, finally, we ended more or less in November, making another adjustment, mainly in the risk line, the expected loss, the provisions. So, when we look at the result of this year, without a doubt, it is a result that shows mainly, not only a transparency of ours, to come and tell the investors, look, there is something happening, we will understand it well and we will come back to you and tell you what is happening and where we think we are going to go. But also a resilience, a commitment and discipline in the execution of our strategy, so that we would be today coming and telling you, This guidance here, that we are practically within all lines, except for the agribusiness issue, It was the result of a lot of work. So, now going directly to the answer to your question, if we can now go to the next sheet. This sheet, I think it is very emblematic, because we saw there, since 2023, a flood of results of an extremely competitive, attractive profitability. We were delivering ROEs, Returns on Liquid Patrimony, above 20%, quarterly profits in the range above R$ 9 billion. And then, when 2025 comes, our Returns on Liquid Patrimony falls to 16.7%. That's when we realized something was happening. Why is it so far from what we expected? We were signaling that 2025 was delivering a profit in the range of 40 billion reais, provisions in the range of 30 and a few billion reais. So it was at this moment that we looked, something is happening, so let's do what we need to do. And then it became clear to us. So, without a doubt, I think these numbers here reflect, and not only, a courage to face and look, but at the same time, a capacity to execute our strategic plan. and focus on what would effectively help us to go through this adjustment moment. And we've been talking about this since the beginning. 2025 is a year of adjustment. We achieved 3.8 billion in profit in the second TRI, practically 3.8 billion also in the third TRI. We came with several initiatives in the physical person to help bring more margin with customers to face the advance of the supply volume. And in agro specifically, calling not only the government, but also the central bank, talking to our entire network, calling the clients to come talk to us, renegotiate, explain what was happening. And then we end the year, in the fourth quarter, with a profit of R$ 5.7 billion, which I consider to be a profit that already demonstrates an inflection of this trend, of value reduction and we managed to deliver a return on the liquid heritage of 12.4% in the fourth quarter. And if I tell you that it was not easy Because if an investor stops to think, throughout 2025, only in results were 60 billion reais of provision. And if I add up the provisions that we made in the liquid heritage as soon as the implementation of 4966, I exceed 80 billion reais. And then I ask you, which financial institution in Brazil would be able to face a challenge of this magnitude that we had never faced in the history of Banco do Brasil, to register R$ 80 billion in provisions and, even so, end up with a profit of R$ 20.7 billion, a return on capital of 11.4%.

And this, Giovanni, I believe has only to do with a balance of a robust bank, right? And we had all the possibility to absorb this impact that was really very big, but with other elements to face it. So we have a financial margin that comes within what we expected, even in this context of greater aggravation. We have revenue from services that also support a level of results, deficit actions and all this corroborates so that we have the possibility to close the year by presenting a profit of 20 billion, even in a scenario of greater volatility.

This is an interesting point, because we started the year, everyone will remember, with interest rates being increased. This increases the cost of capture, this increases the price of credit. And we always had this DNA aimed at the physical person in the consigned. So, we only had to effectively face the challenge that was coming from the rural sector, but at the same time look where we have opportunities to bring more revenue, to be able, in a way, to seek to neutralize. It is difficult to neutralize. If it were possible to neutralize, we would be there with profits close to 40 billion. But it was important to avoid an even greater drop.

Would you like to say something? Yes, Giovanni, I think from the point you highlighted, especially the dynamics that you recaptured well from what we had throughout the year, I think beyond what was faced, I think the how is also very important. We had three versions of Guidance. On the second one, when we resumed the ranges that had been put in review, we came with a very considerable drop. We were very realistic with the market. bringing the magnitude of what we can see at the moment. And as you pointed out too, I think that a scenario of this magnitude of volatility, it demanded a second adjustment, but this second adjustment came predominantly from what we discussed, even in other opportunities, from events that happened throughout the third quarter, which was when we did the revision. So, there were specific cases, there was the issue of agro aggravated by an additional volume of judicial recoveries. So, all of this impacted the issue of credit cost and when I say how, you are punctualizing and marking, using Guidance as a marking tool for the market in a transparent way throughout a cycle like this, is something that I think is really difficult to find parallel in the market.

I think we will have the opportunity to talk specifically about agro. But this point of the R&D, of judicial recovery, it is also very important, because it was also a phenomenon that did not exist in the past. That is why it is a confrontation that we had for this sector, without any parallel. And thanks to the leadership of the first female president of Banco do Brasil, Tarsiana, she managed to give us not only confidence, but also courage, so that we could be looking for the best solutions so that we could preserve the Banco do Brasil shareholder. maintain the strength of our balance and plant seeds for, looking ahead, a generation of more sustainable results, once all this difficulty in the agribusiness sector is replaced.

Giovanni, I think that, taking the hook of everything you put as your impression of the quarter, it is evident when we look at the guidance, the biggest aggressor came from credit costs, you explained, we had several movements impacting this line that had a great impact on the profit of the quarter and the year. It would be interesting to hear from you, explore a little the composition, the movements, what happened throughout the year, even because when we look at the revised guidance version in the third quarter, which was already there, we published it in November, if I'm not mistaken, we ended up closing, not in the middle of the range, a little more to the top. in the 62 bi. Explore a little bit for our audience what justifies this, how you see it and what makes up this dynamic that we saw in the quarter.

I'll even put my hand on my head a little bit because If you ask me, what was the biggest headache we had in 1925? It was the cost of credit, there's no way. Of course, all banks, this is valid for everyone in the sector, the implementation of this 4966, of this new resolution to harmonize Brazilian accounting practices with international standards, it was valid for all banks, it couldn't be different for Banco do Brasil. What was not in the script was undoubtedly a sector. that came from years, from a few years, with super-powerful margins, with a very low level of inadimplency, suddenly start to solve and present difficulty in fulfilling their financial commitments. And then, when we try to understand where this provision, we even put that bar chart on the right, these R$19 billion in credit risk that was made throughout the fourth quarter of 2025, 56% came from agribusiness. The good news is that we were able to open an opportunity for customers to sit down with Banco do Brasil and renegotiate. And that's what allowed, with the provisional measure 1314, which then allowed us to delimit where the risk was, allowing these customers, good payers, but who were in financial difficulties, to expand this payment flow, giving relief, bringing relief to their cash flow, this respite. And we believe that with these measures that we have put in place, we then begin to bring, it is not that I am going to bring it to a level that it was in the past, but seeking to bring a little more normality. Stabilize, right? Stabilize, exactly. Good point. and stabilize this inefficiency. We are expecting, in 2026, to have again a record harvest. So, you have product, you have price. Today, the margin in the field remains positive. I'm talking here in general. You may have a specific case of an ABCOD culture, or possibly some climate event in some region, as it happened in the south, for example, with those floods. But looking at Brazil as a whole, and Brazil is continental, and there are several agricultural products that we finance, we believe that from 2026 onwards we will be able to bring more of this normality, this spirit to the farmer.

Giovanni, I think we covered a lot about the credit rate, how Inagimplência evolved throughout this year. And then I want to change the subject a little bit, right? I think our conversations here are a bit like the meetings we've had. We've talked about it 80% of the time, it's credit rate, it's agribusiness, but I think we have a very important highlight in the top line of the bank. And at this point, I would like us to discuss the gross financial margin, which had a very good performance. Even in a context of greater risk pressure, we maintained a stable margin in the year and I would like to discuss with you some of these components of the margin.

This is a good point, Jana, because We were facing what I have already said, I was even tired maybe saying this, but we had to continue executing our strategy. And we had been very clear to focus on the growth of the portfolio of the physical person, which is the one that would bring more margin for us and would help us to cushion the impact of the risk increase. And when we look at this chart here, You may even think, but you kept your stable margin in the one-year vision. But what is important for us to look inside this margin? Where did we grow up? And there, when you look at what we did to grow our margin with customers, I went from R$ 81 billion in 2024 to R$ 91 billion, it was R$ 10 billion that I added to my margin with customers. And that was the direct result of business that we did with our customers. This is very important. And where did we grow? We focused mainly on the new private consignation. We had already announced our strategic aspiration in 2024, that we needed to have our market participation, which we considered legitimate by Banco do Brasil, in the private consignation segment, which we didn't have. We practically started from scratch. We were always very strong in the public sector consignation. And we started working on it. And we had the opportunity, at the beginning of 1925, with a new government program, via the Ministry of Labor to offer this private consignation. There, for us, an opportunity opened up. So, we couldn't neglect the issue of credit risk, but there was a huge avenue of expansion of financial revenue coming from this new type of loan, which comes with a much better risk adjustment return, and that we had the natural DNA to work with this type of loan. And that's what we did. and we were the first to enter, we already had all the systems prepared, because we worked with it in the public sector, we already had a whole methodology, we expanded and improved our methodology, because when we talk about the worker's credit, I have to look not only at that worker, how much he is earning in his payroll, but also the risk of the employer. Today we have more than R$ 13 billion, we are the second place, we were in leadership at the beginning, so for us it was clear that it was an excellent opportunity and we see this reflected here. And the reflection of this is also on this margin with customers.

And it's important, Juliane, because you have some interesting points, and we talked about this in other topics, but it was a year of a different regulatory framework, so you had changes in the accrual of interest, you had things that impacted the margin, and I even remember that in the first version of Guidance that Jana presented, you talked about the first version that we had of margin, there was a considerable implicit growth. The market even had a certain skepticism that it would be hit, but we were clear that this movement would happen, that it would help, over the year, an acceleration of margin growth. And all this business context that you put, I think it makes it clear that if it weren't for the other situations that we faced, it would have been a performance even in line with that first version, right?

Without a doubt, and it's also important to bring here, for us to look at this margin, then talking about the margin as a whole, right? We have here the result of Patagonia, which is another one that also helped, it was a detractor, right? Because we saw the effect of Patagonia on our margin, especially in the market margin, bringing expressive results in 2023, 2024, already now in 2025. fell a lot. If we tried to isolate it, our margin would have actually grown by 1%. We knew of this potential of growth in retail.

In this context of several moving parts, on the one hand, you have the inertia of a rate that raises liquidity as well, so the capture helps, but on the other hand, you have the context of Patagonia, the whole business context, so keeping the margin virtually stable in 25 compared to 24 is really an achievement bastante relevante.

É notável, vale a pena a gente destacar isso daqui, sem dúvida alguma.

Giovanni, and here, continuing to talk about the top line, another very important element were the revenue with service service. We were there, within the Guidance that we presented, we had good dynamics within, for example, the administration of third party resources, consortium lines. So, this brings a very important complementarity of our result. I think we can talk a little bit about that and also bring the issue of efficiency. You came throughout the year talking a lot about measures that we adopted for cost control and this is reflected here in our numbers, including reaching a low point of the Administrative Spend Guidance. So let's talk a little bit about this binomial here of revenue and expense and how it has contributed to our efficiency.

This is a great point, Jana, because this was another variable that we sought, within our capacity to manage what we were experiencing, to counterbalance the weight of the risk increase. So, first of all, in relation to service performance. If you look here, you will say, but you fell 1.9% a year. First of all, they are not comparable. Because from 2025, with the new regulation, many receipts of services that we counted here, I think the most emblematic were those receipts with credit operations, we had to take it out of here, reclassify it and put it on the financial margin.

And deferred, right?

Before it came here in the head. And deferred throughout the lifetime of the loan, right? of the operation. So, I think, if I'm not mistaken, if my memory serves me right, we opened hands, I think, with R$ 600 million, more or less.

I don't know if you remember the number well.

I think in the year it went from R$ 1.3 billion. R$ 1.3 billion, or even more. So, if that were the case, we would have delivered even more. Here in this line of revenue for services, without a doubt, the highlight is our investment fund business, our asset contributed a lot with our revenue for services. All the companies linked in a way contribute here, our business with cards, our BB Consortium, we are the absolute leader, it generated many receipts here and, in parallel, we needed to control expenses. So, you have an impact of an increase in expenses here as a result of the salary adjustment of the category, which was for everyone, it was more than 6%, if I'm not mistaken, the salary adjustment. But we managed to deliver practically a stable administrative expense when you look at the quarterly view. And in the annual view, a growth of only 5.1%. But here we have made a lot of investments in technology. We have been doing it over the last few years. So you have here depreciation expenses, you have some other data processing expenses. The customer is increasingly using our digital electronic platforms, our app, and all that brings more expenses. Investments that we made in cloud, So, there is the digital acceleration movement of Banco do Brasil itself. So, you had numerous initiatives. I would say to you that we do not neglect to make the right investments, those good investments that will effectively translate into more efficiency, more return, more revenue in the future, and at the same time controlling those expenses that are eventually necessary, are priority. We are going through an adjustment year, so let's take a look at it and I think the numbers reflect that. An efficiency index of 27.7% is, if I'm not mistaken, the best index in the financial industry. It's important to remember that this year we hired employees for the technology area. We had a specific competition, if I'm not mistaken, in 2000, I don't remember exactly. And even so, you don't see this reflected here. Why? Because we are optimizing our distribution network. We are investing in those channels that bring better returns to Banco do Brasil. We launched Ponto BB in Recife, we are creating Hub BB, that is, we are even redefining the way we relate to customers.

Yes, this brings an important optimization for us in terms of distribution, in terms of channels, and it is an innovation where we maintain an increasingly constant presence, whether it is via physical channels or digital channels. So it is a strategy that makes a lot of sense for us, considering even the profile of our client, so it is available on that channel where that relationship makes more sense.

Giovanni, and walking here already to the closing, I think that before we go to the grand finale that we have to comment on the expectations, I think we can't stop going to the capital, because we had a level there above 12%, Anyway, we wanted to hear from you the impressions, the movements, and especially we received a lot of questioning if eventually the payout could be raised again. So, no one better than CFO to comment.

Thank you. No, we will not increase the payout. We do need to protect this capital. Our main, let's say, mission is to ensure the sustainability of Banco do Brasil's business. And for that, we need to have a solid structure of capital. Wow, Giovanni, but we ended December with 12.23%. And I'll tell you one thing, we've put a lot of effort into delivering this level of capital. We need to resume the profitability of Banco do Brasil to generate organic capital. Here we already see, if you go from 11 to 16 in September 2025, what I added to organic capital via profit generation was 26 base points. It practically financed the expansion of my asset. My RWE there grew 28 BPs, it even got two points higher, I owe two points of capital here because of the growth of my assets. But we had prudent adjustments that ate 39 percentage points of my capital level, but the provisional measure of 1314 was fundamental. So, all this mess that we, together with the government and the Central Bank, and that they presented to all the agents of the sector, it is important to say that MP 1314 did not go to Banco do Brasil. it was for the entire productive chain of agribusiness, because it's not just the Banco do Brasil, you have other players, other financial institutions, so much so that the provisional measure generated 144 more base points of capital. So I would say to you that 1223 which is our main capital index, we ended up with a Basel of 15.13, a super good Basel. This 12.23 is a comfortable level, it gives us security to continue with our business expansion strategies, but we have to be very cautious. Why? Because the year 2025 was a year of adjustment, the year 2026 tends to bring us a reversal, but we have to put Banco do Brasil in the first place. We need to guarantee this strength of its capital so that it can continue expanding its businesses in a sustainable way looking forward.

Yes, but I think it is also important, even within this context, to distribute more than R$ 5 billion to our shareholders and still preserve the level of capital to continue financing our growth.

Good point, well remembered, Janaína. So, I think it only confirms what I have said, the strength of Banco do Brasil. which other financial institution would support more than R$ 80 billion in provision and still delivering profit, delivering growth of its main capital, paying dividends? So, I think it's a round of applause for all the employees who form Banco do Brasil and also for our clients who trust us. No doubt, 2025, It was a challenging year. We faced it with courage, but now we need to look ahead and talk about 2026. We are very excited about what we still have to do in 2026.

Well, Giovanni, since you talked about 2026, and as Marcelo just said, one of the most expected themes by the market is precisely our indication, our estimates for this year. So let's discuss here a little bit of our guidance that we just presented to the market.

This guidance, as you can see, we are still cautious, because we can't neglect the credit. So, you can see that the credit cost is still under pressure. We delivered R$ 25 and R$ 60 billion. R$ 62 billion, thank you. We expect, in 2026, we have a range between R$ 53 and R$ 58 billion. It's already smaller, But we believe, and this will also bring relief, in a way, to the bottom line, and that's why we have an expectation of growth of 10%, 15% of our earnings. I think this is also positive. But we don't expect to resume the profit level we had until 2024, because we are still in this process of recovery of growth and recovery of the bank's profitability. And where do we believe it will help us to make this recovery? Without a doubt, in the portfolio of physical persons. The growth of credit, despite the long-awaited reduction in interest rates in the country, we will still grow cautiously In the case of physical people, we expect to grow between 6% and 10%. If I'm not mistaken, the estimate of FEBRABAN for the market as a whole is a growth of 8%. So we expect to grow even more eventually. But betting a lot here on the consigned, be it the public sector and private consigned. There was an increase in the minimum wage, there was an increase in public servants, etc. is beneficial. With a lower interest rate environment, it is also beneficial for the expansion of this portfolio at a lower risk. But we see that the agribusiness appetite has cooled, we have a range between minus 2, that is, even a reduction, but we are having a low for loss, we have a natural reduction of this balance, and the own disburses of the SACRA 25 and 26 are being smaller, we are demanding more guarantees, financial alienation, so we see a portfolio of agribusiness fluttering in terms of balance when compared to 2025. Companies are a little more difficult, I think we will be house to house, here it will be very cherry picking to serve our large customers. You still have in micro and small companies a pressure of inadimplency there, a high risk, not even a greater deterioration pressure, quite the opposite, the new crops are coming even with lower risks, this is positive. but the interest rate reduction environment is benign and eventually we can, even looking at the second semester, maybe even accelerate it. But we believe that this whole strategy will be fundamental to sustain the growth of our gross financial margin. So, our guidance is that we hope to grow this gross financial margin between 4% and 8%, depending on how the economy behaves, the dynamics of the different sectors with the beginning of the reduction of the interest rate. We are waiting for the cuts to start in March. So, I would say that the second semester tends to be a more pungent semester than the first. The first tri is still going to be cleaning up the waste from agro. In terms of service delivery receipts, it is the growth of our business of the connected ones. Here you have again cards, you have again consortia, our asset and other companies that also help us here to generate these results. a strong control of administrative expenses, this year there will be salary renegotiation again, we expect a growth in expenses between 5 and 9, very much focused, on the one hand, on the control of expenses and, on the other, in the advancement of productivity through investment in technology. We will continue to make our investments, which we need. We cannot give up on this, it is fundamental. And then, ending with a profit expectation, to liquid between R$ 22 to R$ 26 billion. So, we are to expect a growth of 15%, even 20% of earnings, if you focus in the middle of the range.

We closed the year at almost 21%, so it indicates that the change in the direction of the vector, this is quite important. Well, Giovanna, so I think it was very clear, right? Twenty-six, we have a focus here on the containment of this inadimplence that we saw, the whole effect of improvisation brings this effect of lower loss. We have a robust business generation that brings us a very important margin growth opportunity and all this dynamic of growth in credit, in efficiency, as this guide so that we have this recovery in our profitability, as our Guidance shows. And then, with that in mind, I'm going to ask you to close our program here and then we say goodbye until a next opportunity.

Well, thank you, Jana, thank you, Marcelo, and also congratulations for the work you do at the front of the investment relations management. It is very important for us to have at the forefront of this area extremely committed, competent people who know Banco do Brasil in its smallest detail, because they are actually the spokespersons and are responsible for listening to what you want to know, your doubts, and looking here at the bank for the details, along with the areas, what we need to inform you to have the best view of what we are doing and where we want to go. And it is very clear in this guidance that, without a doubt, this is an extremely committed board in generating value for our shareholders and at the same time recognizing the importance of our employees to help us to go through this moment and keep delivering and improving more and more the service, the satisfaction of our customers. So, we believe that Banco do Brasil, without a doubt, has the capacity to deliver much more value than what it is delivering at the moment, but we also have the strength to face these difficulties with our heads raised in a high way, having the courage to address the points correctly and, at the same time, to make it clear to you where we want to go. So, Banco do Brasil is a bank of more than 200 years, it has a very important social role, it is the largest financier of Brazilian foreign trade, of Brazilian agribusiness, and also of Brazilian people and companies. And we will continue to fulfill this role and now offer more and more, especially for the physical people segment, new solutions with technology, but with humanized service and always relying on the control of costs and efficiency. So for us it is very gratifying. After everything we lived in 2025, we are here announcing to you an expectation of guidance, growth, results, business expansion and increasingly improvement of our service and with a cutting-edge technology embedded in everything we do. Thank you very much and also thank you to all our investors who believe in Banco do Brasil. e até o nosso próximo resultado, né?

Obrigada e até a próxima.

Tchau, pessoal. Tchau, tchau.