Banco Do Brasil Sa S/Adr

I'm Janaine Stott and I'm here today with Giovanni Tobias and Marcelo Alexandre to talk about our results. So, welcome to the videocast of the first quarter of 2026 of Banco do Brasil. Well, Giovanni, to start, we discussed a lot with the market about the recovery of the bank's results, right? And you even commented if this result would be a U, if it would be a W, and we get here to a first quarter of 3.4 billion. So, to start, I wanted to talk a little bit about that and bring the main highlights.

Without a doubt, Janaína, 2025 was a very challenging year. You can see the evolution in the chart. We started with R$ 7.4 billion in profit, with a ROE of 16.7%. We had all that problem involving 4966, with an increase in the risk of rural operations. We fell to a profit of R$ 3.8 billion, two consecutive quarters, with very close profits, a profitability of 8.4%. Already in the fourth quarter, we saw a recovery, already a profit of R$ 5.7 billion. The fourth quarter usually has a better performance, than the first quarter, for example. We have already shown a ROE of 12.4, but we had this expectation that the first quarter could eventually, given its peculiarity, with smaller useful days, etc., come a little smaller. That's why I was in doubt whether it would be a recovery in U, in V, or even in W. And this result, without a doubt, brings our profit back to the level of R$ 3.4 billion, a ROE of 7.3%, even lower than in the same period compared to the second quarter of last year, a little smaller, but we were already anticipating for the market that we would probably still have a sequence of risks, mainly in the rural portfolio. In a way, we felt that the numbers, perhaps in the first quarter, being the first quarter also a month with less activity, In fact, we are delivering, we would like to deliver a greater profit, but this profit, if we look only at its number, we stop seeing very important things that I consider that already reflect this change in the strategy of Banco do Brasil. we are adopting to face this most troubled moment of risk, especially in the rural portfolio. So, I would like to ask for your permission to show some data that I think it is worth looking at. Despite this profit with a lower ROE, the growth of our gross financial margin is undeniable. We reached R$ 27.4 billion in the first quarter of this year, when we compare with the same period of last year, a growth of almost 15%. So this shows that we are growing our business, doing more business with our customers, and you see this reflected in revenue with credit operations. There were 46.5 billion reais of revenue, a growth of 10.5% in one year. Our treasury has also benefited from the macroeconomic scenario itself. We grew the result by more than 20%, 23% to be more precise, reaching 8.9 billion reais. When you look at other lines of business, the revenue with service, also had a very good performance, very much in line with the growth of the administrative expenses itself. This then protects our coverage.

Efficiency, right, Gilberto?

Efficiency, exactly. We reached R$ 8.8 billion in revenue with rates, and then we will be able to go down a little more looking at these lines, but without a doubt, the businesses of our connected companies have helped Banco do Brasil to go through this most delicate moment in the banking activity, mainly in the rural portfolio. And we ended the quarter with a good capital index, 11.59, which guarantees us this continuity in the growth of business with customers. So I consider this a very important fact. And without a doubt, the capacity of Banco do Brasil of continuing to generate business is what will allow us to resume this growth in profit, looking ahead.

As you said, Giovanni, I think there was the recent event that we did, the BBD, where a lot of this dynamic that was already expected was discussed. You mentioned the 3.4 billion. We had, in a way, some visibility that the beginning of the year would still be a little heavier in television. But as you said, the business results generation part is performing well. It's more a question of credit costs and not where the bank generates business. You explored the conglomerate a lot in your speech.

It's important for us to look at Banco do Brasil, not just at what would be the banking planet. Look at the whole solar system of Conglomerado BB and the other businesses in orbit, aligning, helping us to generate more results. But I would like to draw your attention to a very important detail when you look at the structure of our credit portfolio. You will notice that we have been growing in our physical credit portfolio in those lines that bring greater spread. If you see, we even open this in our performance analysis, the average spread of the physical person portfolio increased thanks to the growth, mainly of the public consigned, we are the leader in this market, we have grown already in a very large base, we have grown more than 7%. The worker's credit, which was a portfolio that was practically non-existent last year, today we are the vice-leader of this market. We have already reached R$ 15 billion in balance in this portfolio. The base was very small, so it's no use talking about the growth rate, but it clearly demonstrates the focus that we gave to the growth of the physical person portfolio. The agribusiness portfolio, we have been very vocal, saying that we will continue to meet the needs of our customers, but we had to establish some very clear strategies for us to be able to contain the advance of unemployment, we developed a resilience matrix, We made an allocation of capital to those clients with a better return adjusted to the risk, so that we can continue the growth of our businesses, but guaranteeing the recovery of the growth of profitability. This is not overnight, it takes some time, but we are already starting to notice.

And Giovanni, I think an important point that you also put about the agribusiness. Until February, we finished operating together with MP 1314. So we made 37.9 billion here. We even brought some openings of this number in the fourth quarter, and now with this vision closed, 92% with real estate warranty, and 72% with fiduciary alienation. So this helps in the qualification of this portfolio more and more.

Without a doubt, I think this is a very important point. For us it was very important to take this qualitative leap. in the guarantees that were placed, and we made this very clear to the market. Traditionally, we worked with mortgages, with saffron payers. Banco do Brasil practically did not act with the financial alienation. and with the renegotiation in the scope of the provisional measure 1314, it allowed us to advance in this type of guarantee. So, I think this sheet clearly shows this. We were able to expand our credit portfolio with focus, either in those operations with a better quality of guarantee, or be in operations with an adjusted return to risk, much better, with a focus mainly on the physical person. And then, the reflection of this, if you look at where it is reflected, in our gross financial margin. So, again, the profit, of course, we are in this recovery phase, we would like to offer a greater profit to our shareholders in this quarter, but if you look In the details of the formation of this result, I consider the data extremely positive. You see our management margin, we reached R$ 27.4 billion in the first quarter, the first quarter that is usually weaker, almost in line with the fourth quarter of last year. And here is the gross financial margin. I'm not bringing here the risk of credit yet. So you realize that I have changed the level of business generation. And then, when you look at the global spread as a whole, I managed to keep it higher than in the same period last year, at 4.8. It fell slightly compared to the fourth T, but I would like to draw your attention to a point. You had a conjunctural issue. The average TMS of the first quarter of 26 was slightly lower than that of the fourth T. You had a calendar impact. And there is another factor that I think is very important that we are bringing here under perspective. It is that, without a doubt, the growth of my portfolio in those physical person operations that have a greater spread helped to protect this fall.

This parallel is interesting, Giovanni, because really, when we look at the dynamics of the margin last year, 1T versus the fourth T of 2024, we had a nominal drop, if I'm not mistaken, of almost 3B. And now we're talking about 400 million, even with all this seasonality that you put in. So there's really something, evidently, that has changed within the composition.

You can see, without a doubt, that this is the realization of business. I have a revenue of credit operations here growing 10% in the year-to-year view. You have a treasury result also growing 23%. So, I consider that the banking performance before provision, it already demonstrates the result of our strategy of growth in our portfolio of physical people to be able to face what we are going through in the portfolio of agro in particular. But it doesn't stop there. I think there is another side that is also important to emphasize, which is in other lines of business. I commented on the companies linked to the BB conglomerate. And we can see this when we look Here I think it is also worth calling attention to the fact that we have grown 5.5% compared to the same period of the previous year, practically stable compared to the fourth quarter, which is usually a more robust quarter. And here the highlight, without a doubt, I had a fantastic growth in my revenue with fund administration, a growth of 8.6%. Another performance that is worth highlighting is my entire security universe, which also added R$ 1.5 billion, 3.5% growth. And our, I would say, brilliant star that has helped the Banco do Brasil a lot in amortizing the impacts of everything we've been going through, which are the business with consortia. Today, the consortium already adds up to R$ 932 million, 14% growth in the quarter. I consider this extremely relevant, demonstrating the power of Banco do Brasil in generating results. And then you ask, is this enough? No, it's not enough, but it's very important. And in parallel, we can't neglect of our structure. We continue to make investments in technology that we need, we continue in an increasingly close relationship, focusing on the diversity of our workforce, and then you look at the growth of our administrative expenses, over the last 12 months was completely controlled in line with the salary adjustment given to the banking category. So, I would say to you that we have managed to grow businesses with a stable structure, maintaining the efficiency of our business, without a doubt.

Yes, and I think that even since we are talking here about some positive points, right, of the business highlight, I think it is also worth passing on the capital, right? We talked here about the growth of the portfolio, how we have qualified, looking at the issue of guarantees. in agro specifically, the whole program to bring a little more breath to the producer, how we have been qualifying with, for example, MPMS and then acting together with the guarantor fund. So I think all this makes us comfortable here for this vision of growth that we have and at the same time with robust capital to support this growth. So let's talk a little bit here about the moving parts of capital that we had here this quarter.

It was good to be touched on this point, Jana, because last year, in addition to the entire risk increase in the rural portfolio, we were also aware of the impact that a smaller organic result could bring on our business growth capacity. This motivated us to reduce the payout of 45%, we took it to 30%, We maintained, by 2026, the level of 30% of payout, we knew of impacts on capital that would be due to regulatory adjustments and prudent adjustments, and we also had the CGPE, which would be the capital that was accounted for at the time of the pandemic, capital of money for small companies, which would have the final deadline now, in January of this year. And what we clearly see here on this slide is that we managed to end March 2026 with a robust capital index of 11.6, 11.59 to be more precise, greater than in the first quarter of 2025. And if we look only here, we generated 15 BPs of organic capital with profit, this profit that I showed there, which was already a ROE of 7%, but it was enough to cover the growth in my RWA. And where did we actually have a reduction of this main capital, which in December was 12.23 and ended in 11.59? Basically, as a result of prudent adjustments. and regulatory, which reduced to 70 BPs, more or less. The CGPA was practically netted, the negative impact it would have, it was netted with the renegotiations made in the scope of 1314. So, I would say to you that as we stabilize this inadimplency, and returns the organic generation of results, we guarantee the growth of our profit, of our assets, and with a level of capital that I consider comfortable to sustain this growth.

Interesting, Giovanni. The issue of capital that we have been dealing with the market for a long time, all these movements that we anticipated from 2026, the market had a lot of anxiety to see how they would be manifested. And you brought it very well here, broken in each one of the natures that we had. And it draws attention, especially what you said, the CGPE and the AMP, They use the same foundation, the same mechanism. The situation that we went through by agro was so aggravated that the same mechanism was used to help the producers, which was given as an incentive back there in the pandemic. the negative effect that we ended up going through last year. So, here we kind of pay a debt with the disclosure market, showing effectively that what we were talking about has been realized. One effect compensated the other, but fundamentally because the mechanism is the same.

Yes, and it was very important for us to guarantee this main, comfortable capital index to finance business expansion. We can't stop serving our customers and, of course, focusing on those lines that will be able to bring better organic results to Banco do Brasil.

Well, Giovanni, you talked here about better organic results, but I can't help but pass here in our Guidance. As much as we have brought a robust result engine, the cost of credit has still hurt a lot. E nós fizemos um ajuste importante agora nesse primeiro trimestre. Então vamos falar um pouco a respeito disso, o porquê desse ajuste de Guidance, quais são os drivers para ele e o que a gente está enxergando daqui para frente, para esse nosso ano de 2026.

Yes, this point, Janaína, without a doubt, made us reflect a lot before making this decision to adjust this Guidance. Because we were still in this expectation of a first quarter, it would be more aggravated, but we were still But what motivated us, mainly, was not what happened in the first quarter, it was mainly looking ahead. It is important to remember that last year, at this moment, we decided to suspend the Guidance, because we were not clear about what was happening in the rural segment, which would justify us losing the reference in terms of provision. It is completely different from now. Now we begin to look at this portfolio within an aspect of operations that had been renegotiated, older operations, of previous cycles, of previous 20 days, which continue with a level of punctualization still beyond what we consider ideal for us to recover a normalized risk level in this portfolio. And we also notice that the new SACRA, the new SACRA that was made, SACRA 2526, already within a resilience matrix with more robust guarantees, such as financial alienation, present a better punctualization index, but not enough to justify a guidance that we estimated close to R$ 56 billion for every year. So, the market was going to question us that in the first quarter I already delivered practically R$ 19 billion. It's as if in the next three quarters I had to be doing around 13 billion a quarter, this would not be feasible. So, even to sustain our commitment to transparency above all, with the market, and also our credibility, we believe that everything we are doing is with the intention of normalizing this portfolio, but it is important that you have the exact dimension of what is happening. And then, the decision we debated within the Director's Council, all the vice-presidents, the president, Tatiana, and the best we could decide at this moment was to make the necessary adjustment for what we are seeing as an aggravation of the risk, of continuity and improvement of the credit risk of the portfolio as a whole. So, in our best estimate today, what is expected is for us to account, throughout the year of 2026, a credit cost between R$ 65 to R$ 70 billion. Of course, it was not just this mix. The increase in this cost reflects directly on the bottom line, that is why we are also adjusting the liquid profit guidance, but for that we continue tirelessly, in the growth of our businesses, in the control of the employment scene, in the revision of the payroll, in the improvement of the quality of the guarantees, but we could not simply say, look, maybe we do not buy with a credit cost guide. So, if you can bring here what we notice, in the first quarter we have a credit cost practically in line, there was a growth of 5% when compared to the fourth quarter, but it was R$ 18.9 billion, a budget spending index on the portfolio that continued to aggravate, increased to 5.78%, but there is a new element here, because the agribusiness portfolio is undoubtedly the biggest offender in terms of credit risk. My recovery has not yet I had a recovery of R$ 1.2 billion in the first quarter.

Below our expectations.

Below our expectations. We expected a recovery of R$ 2.5 billion per quarter. but the stairs are still being normalized. And you also notice here a behavior of ours in relation to the physical person, even prudential, given the worsening of the risk, mainly due to the superannuation. Of course, we did not have a visibility of what this program would mean, the so-called unroll of the physical person, but we have already anticipated and reinforced a provision, especially for credit card wallets, but I think we will be able to bring a detail to the physical person.

We brought here, in the next slide, Giovanna, we opened the wallet and the quality dynamic, which illustrates very well what you said. We are seeing some signs there, when you look at the 30-day INAD, the short INAD, of elevation, and this, obviously, from what you showed in the previous slide, there was a trigger of preventive provision constitution, from what we can see.

Yes, so much so that you see the coverage there about the new NPL, there was this jump there, but we believe that this short INAD tends to migrate to the 90-day INAD, Of course, I don't know the outcome of Desenrola to eventually improve this indicator. There is a 90-day deadline for physical clients to renegotiate their debts, which are delayed. But, without a doubt, we have already anticipated this movement. It is a fact that we have grown our portfolio well, as I said at the beginning of our conversation here. in the annual view, 7.8% growth, but we cannot neglect the risk of this portfolio.

But as you said, Giovanni, as the unemployment rate is short, this would come in any year.

It would totally come. Now, without a doubt, what worries us the most, I wouldn't say worries, but what brings us the most caution, without a doubt, is the rural portfolio. We bring here a slightly larger detail here for you of the agribusiness portfolio. We have, and the Vice President himself, Diagro Negócio said this, we practically do not yet have visibility of the new crop, 2026-2027, but it is a fact that this portfolio is still at a very high risk. You start to notice here in this first quarter a smaller NPL, but it is good to remember that the first quarter has a smaller volume of earnings. We practically made the volume of provision of the size of the new NPL, the 102% coverage index. You start to have an ENAD 30, a little less than the fourth quarter, but we are taking this guidance adjustment decision, not based on what was observed in the first quarter.

The effect of the punctuations.

And yes, what is happening from April onwards, which are the punctuations. This chart is very good because it clearly demonstrates that this yellow bar is the last Safra, the last vintage, right?

Already with the changes.

Already with the changes, the resilience matrix, the best guarantees. Here you realize that her relative participation in the whole of wins is still small, 27%. The bulk of the wins are still from previous Safras that don't have the same mechanisms. Looking at last year's April, when we suspended Guidance, it's better. It improved a little, as these previous interest rates will reduce their relative participation in the portfolio as a whole and the new interest rates, the last interest rate by the way, it will increase its relative participation and we hope that gradually this average score index will increase and with that the risk of this portfolio tends to cool down. But it's not enough just to look at this matter of punctualization. There is a phenomenon that we have been talking about since 2024, which is the phenomenon of judicial recoveries. And we can't stop looking at it. That's exactly what this sheet is about. Here it is clear, we are bringing a view of the flow. It is important to remember that this first quarter is usually accompanied by the recess of the judiciary.

The number is not very safe, right?

You can't say that it won't be. It's not that I'm being pessimistic, it's not that. But it's because here we have to be very careful, we have to be very diligent. You have a volume of processes that reached a peak in the third quarter of 2025, totaling a volume of 1.84 billion reais. a flow of new processes of 209 new processes. In the fourth quarter, there was already a cooling here. It began to present a tendency of reduction, but in the first quarter, despite the volume of the new processes having totaled R$ 1.34 billion, the amount was 162 for a quarter that had a judicial recess. So this kind of lit an alert Of course, the CNJ released a... the term, I don't know if it's a summary that we could say... It's a provision.

A provision. This is 216.

Thank you, Chanaína. I'll remember. To try to equate the court's understanding of how to deal with the requests for judicial recovery, because each judge was making their understanding differently. But looking at the numbers of April, for example, only in April I already had 61 new processes, requests for judicial recovery, totaling 650 million reais in a month. It doesn't mean that this here, you know, simply multiplying by three, you can't know, because we have done a work of awareness and explaining to our client because you have numerous ways for him to negotiate this loan that he may be having difficulty paying. Now, we are also in a moment, which is important to say, of great uncertainties. The geopolitical scenario as a whole, the impact of this on the price of agricultural commodities, you have the macroeconomic issue itself, all economists are reviewing their estimates of SELIC. We were working with SELIC Média for the year 2020, near the house of 13%. We started with Selic at the end of the period of 12%, increased to 12.5%, now we are already going to 14%. 13.5% to 14%, right? At the end of the period. And this will also give a CELIC average close to 14%. So, all of this brings impacts, without a doubt, to different sectors. And finally, looking at the legal person portfolio, of course, it ends up suffering, especially micro and small companies, they suffer a lot with this higher rate of interest rate. so much so that the volume of growth of this portfolio, we have been very selective here, taking great care to control its risk. But I brought this slide here for you just to show the investors that it was a point that appeared a lot in the last quarter, which had this increase in the 90% of the legal person, which went to 3.75%, and there was a very specific case and it was said by our Vice President of Risk that this would be resolved in the first quarter, because it was an operation that we had structured, which at the first moment aggravated the inadimplency of that portfolio, but then it would return to normal in the first quarter. So, in the first quarter, we have already returned to an inadimplency of 90% in the portfolio of a legal person of 2.87%.

It is important to remember, Giovanni, that this case that has been resolved now did not bring, this resolution did not bring impact on the result for the bank. So, we normalize this level of inadimplency without direct impact on the DRE.

One thing that I think is also important to show here is our strategy of micro and small companies. We managed to beat an unemployment rate from 90 to 10.57 days. We managed to control and bring this unemployment rate to a level more palatable, from 8.79, and being very careful here in this management of this growth of credit, with also a resilience matrix, very similar to what we expect to see in the Agro portfolio. But then, Jana, to finish, it was basically all this risk-aggravating context, if you can go back to the Guidance sheet, we decided to review the line of the credit cost for a range above the top that we had, so we are working with R$ 65 to R$ 70 billion. We also have a reflection, given this whizzing cycle so expected for our economy, it will bring a positive result to our margin, So, we are also adjusting the gross financial margin for a growth of 7% to 11%. Before, we had an expected growth of 4% to 8%. And the reflection of all this together, keeping the operational premises that we have managed to deliver, we will deliver a liquid profit for 2026 between 18 and 22 billion reais. This is our best estimate that we are now promoting to the market.

Great, Giovanni. Well, I think we had a very complete conversation here. We talked about all the items of our results, we discussed a little of our future perspectives. Thank you, Giovanni. Thank you, Marcelo. And thank you all for the audience. We are also available here, the R&D team, for any clarification, for any deepening that is necessary. So, thank you very much and see you next time.

See you next time, guys.