B3 Sa Brasil Unsp/Adr

Good morning, ladies and gentlemen, and welcome to the audio conference call of B3's earnings results for the second quarter of 2023. At this time, all participants are in a listen-only mode. Later, we will conduct a question and answer session, and instructions to participate will be given at that time. If you should require assistance during this call, please press star key followed by zero. As a reminder, this conference is being recorded and broadcasted live via webcast. The replay will be available after the event is concluded. I would like now to turn the conference over to André Vega-Milanes, B3's Chief CFO and Investor Relations Officer, who will be joined by Fernando Campos, Investor Relations Associate Director.

Thank you. Good morning, everyone, and thanks for joining our call for the results of the second quarter. I'll start briefly just with some general comments about the environment during the quarter. We saw a more favorable environment, especially more towards the end of the quarter. The market started ready to anticipate the beginning of interest rate cuts in Brazil, which have recently materialized last week. A more constructive view or more favorable view in terms of economic growth as well. And that has benefited volumes in our core business, especially in the in the equities market. So as a result of that, Fernando will provide more details regarding the performance of our revenues by segments. But in general terms, we saw revenues pretty much in line with the last quarter of last year and then small advance in relation to the first quarter this year. equities have shown volume recovery compared to the first quarter, but are still below the levels that we saw during the second quarter of last year, primarily because of the lower market capitalization of companies, although we saw a very healthy turnover velocity during the quarter. The performance of the listed derivatives were driven primarily by the performance of interest rate contracts that are also associated with this beginning of an easing cycle here in Brazil. One thing that I think it is worth highlighting is that we had two business days less than in the first quarter of this year, and that makes a material difference in terms of revenues. On the listed segment, this represents around 25, 30 million reais a day. OTC remain with the performance very robust, reflecting that still environment of still high interest rates with both new issuances and inventory growing quite well in relation to the last year. In data, it's worth, again, highlighting that this already incorporates the results of Neurotech, roughly speaking, a month and a half amounted to 12.5 million reais. In the expenses side, As we have been discussing, the project that we carried out last year, consisting in initiatives aimed to seek for efficiencies, not only at that point, but in a more permanent way, we have been able to reap the benefits of that project and those initiatives, expenses for the quarter reflect this to a large extent, excluding the impacts of the consolidation of neurotech, which was not in our numbers in the prior years. Expenses would have, not only on the prior year, but were not also included in the prior quarter. Expenses would have been 0.4% higher to last year and 0.7% lower than the first quarter, well below the inflation measured by the IPCA during the quarter. On that end, I just wanted to, again, reemphasize our commitment to cost discipline and that our target remains to be closer to the lower end of our expenses guidance for this year. I will now bring Fernando over to talk about the operational performance of each segment.

Thank you, André. Starting with the equities segment, so we saw ADTV of 26.9 billion in the cash equities market during the quarter, 7% growth compared to the first quarter. When compared to the same quarter last year, it was 7% lower, mainly due to the smaller market cap of companies. while the turnover remained at high levels at 160%. Regarding fees, the recovery from 1Q reflects mostly the customer mix, where we saw lower activity from players that use the ARC location, which usually is related to customers that pay smaller fees. Still in equities, I think there are two things that are important to mention here that offset the growth in the trading revenue of cash equities. First, index derivatives, which showed a volume decrease both compared to 2Q22 and 1Q23, mainly reflecting the decrease in individual investors' activity. In stock lending, we saw the reduction of the negative market sentiment led to a lower transaction rate resulting in lower revenues for B3. Moving on to a list of derivatives, we saw a second consecutive quarter of historical record with 6.4 million contracts of ADV, a 50% growth year-on-year and 7% growth quarter-on-quarter mainly reflects the increase in the Brazilian real interest rate futures contract, which increased 83% year-on-year and 9% quarter-to-quarter. On the other hand, we saw a decrease in the average revenue per contract, mainly due to the concentration of volume in the short-term part of the curve, which is cheaper to trade than the longer part of the curve. So in the OTC market, it performed well, mainly due to the high interest rates. We saw, like I mentioned, the volume of issuances and the average inventory of bank fund instruments grew by 10% and 40% respectively, compared to the second quarter of 22. Here, it's also worth highlighting the strong growth in the a treasury direct product, which saw an increase of 30% compared to the second quarter of 22, and 11% compared to the first quarter of 22 in the inventory of the product. Lastly, in technology data and access, it's worth mentioning the growth in the OTC utilization line grew 10% year-on-year, 2% quarter-on-quarter, mainly driven by the growth of the funding industry. And that also, it's just reinforced that here we have 12.5 million reais in revenues from Eurotech. And now I'll give a call over to André to talk a little bit about all the financial results and strategic advancements.

Thank you, Fernando. So just some other few points here before we go to Q&A. First, brief comments here on the financial results. We had a positive financial result during the quarter, around 103 million reais, which was pretty much in line with the first quarter when we exclude the non-recurring revenue that was registered during the first quarter related to the partial repurchase of some of the outstanding bonds that we had issued, as we had already highlighted during the first quarter. That was a non-recurring result, which did not occur again this quarter. Our EBITDA, recurring EBITDA amounted to 1.6 billion during the quarter, a margin of almost 74%, and the net income during that period was 1.1 billion reais. During the quarter, we have also distributed around 1.2 billion reais, including nearly 550 million in share buybacks, and the remainder distributed through interest on capital. Just one technical point, as you probably noticed, we have made a small revision to our guidance for depreciation and amortization. This is exclusively linked to the acquisition of Neurotech, As a result of the acquisition, we have to recognize as part of the purchase price allocation process some intangible assets and whatever the remainder that is not recognized is recorded as goodwill. The intangibles are amortized, so we are basically revising our guidance to include that amortization from these intangibles that were recognized in our financial statements. I think it is also worth mentioning some announcements that were made during the period. In June we announced the launch of a new platform for issuance, registration and trading of tokenized assets. This is in line with our strategy of testing new technologies and bring innovation to our core business. In July, we have also announced the launch of a new platform for fixed income assets, which is already operating at this stage only for federal government bonds, but that will be also used for corporate bonds and other fixed income securities. The main objective here is to increase transparency, reduce costs for our customers, make the process more straightforward, and also enable higher volumes and automation in trading. which we believe is important for the continuous development of this market. And finally, I just wanted to make a few comments regarding the partnership that was announced with Nasdaq. This is a new partnership, but it's to an existing agreement with a company that was acquired by Nasdaq in the past. With that renegotiation of terms, we ensure more investments in technology to keep evolving our solutions to better provide services to our customers, also to facilitate the increase in capacity and expansions in the future. As a result of that partnership, of course, NASDAQ also benefits from having B3 as a customer and its experience in operating a very unique market such as ours, which is also important for them to keep evolving their solution that is offered to other markets and other customers. So I think it is just worth that that does not change our guidance for investments, expenses. As I said, it was a renegotiation. of terms of an existing partnership, nonetheless an important advance with an important partner for us. With that said, I'll leave the floor open for questions and answers now.

Thank you. Ladies and gentlemen, We'll now begin the question and answer session from investors and analysts. If you have a question, please press the star key followed by one key on your touch-tone phone now. If at any time you would like to remove yourself from the question queue, please press star then queue. The first question comes from Tito Labarta with Boatman Sachs. Please go ahead.

Hi, good morning, Andre Fernando. Thank you for the call. I'll take you to my question. A couple questions. I guess first on your revenue growth, it was kind of flattish in the quarter. I mean, I think there's been a lot of interest in the name, particularly as rates come down. And you mentioned it should be an optimistic outlook with lower rates, particularly for equities and other revenue lines as well. But just to think about when we can see that inflection, because if we look, volumes recently have actually been a bit weaker, July and August running around $24 billion. Also, even derivatives, you had good volume growth in the quarter, but revenue per contract was down. So how do you think about revenue growth? I mean, do you think you need to see... the lower rates first and when do you think you could get to pick up in revenues from there, just to get a sense of the sensitivity to potential movements in rates. And then I'll have a second question afterwards. Thank you.

Thank you for your question, Tito, and for joining the call. Look, that's a very difficult question. I mean, as we said, I think June was an example where we started to see some recovery in anticipation of that movement. July and beginning of August are typically periods that have some level of seasonal, so if you look historically, it tends to present a weaker performance. In our view, that's associated with the holiday period in the northern hemisphere and other things. There was also not a lot of, let's say, volatility during that period. So, I mean, we remain more optimistic in terms of potential recovery of volumes as interest rates, rate cuts progresses. But it's difficult to give you exactly the timing for that in our view. As we have more clarity in terms of the interest rate, the interest rate curve pointing downwards, that should be enough to restart that movement. retail investor will probably come later than the rest of the investors. But we definitely are more optimistic now in resuming again a more favorable cycle for the equities market in Brazil.

Okay, great. Thanks, Andre. And maybe just one follow-up on that point. I mean, we would expect volumes to go up as well, right, the more rates come down. But how do we think about, I guess, the pricing with the volumes, right? Because typically there tends to be an inverse relationship. We've seen that a little bit on the derivative side as well. But is that fair to assume that revenue should probably lag volumes a bit because of potential inverse relationship on the pricing side?

Sorry, I didn't understand exactly your question. Apologies.

No, no problem. I mean, typically as volumes go up, you know, pricing comes down, right? You give more discounts for more volumes, right? So is that pretty much the expectation that we should have or, you know, just to think about a little bit kind of the difference between volumes and revenues?

Yeah, I think, you know, given that we are not envisaging any significant changes the need for any significant changes in our pricing schedule, the behavior of the margins will be linked to the behavior and volume, but also to the mix of customers. So as you saw during this quarter, margins were impacted primarily by that factor, by the mix, but In theory, you're right. The higher the volume, the higher the discount in our pricing schedule, but there's also a mixed impact. So we have more retail investors that could have a more favorable mix in terms of margins. On the other hand, if you have a higher mix of high-frequency traders and these sort of clients, they pay lower fees, and therefore, you also have an impact on margin. So I think those are the two factors to take into consideration when looking at margin behavior going forward.

Okay. No, that's helpful. Thanks, Andre. And the second question I had was more on the regulatory, you know, with pending tax reform. You know, a lot of talks about, you know, IOC, you know, what happens with dividends and I mean, I think you typically pay the maximum you can on the IOC front. But if you can just give us your latest thoughts on potential changes in tax reform and anything you can do ahead of tax reform to maybe maximize your tax benefits, you know, aside from paying the maximum in IOC that you can.

That's a tough one. I mean... I honestly, based on what we have been hearing, I think there are still some doubts if we're going to see changes to the IOC or not. What we heard is that taxation of dividends and IOC changes in corporate income tax would not be tackled at least not this year, right? But again, we have to follow that very closely. Based on prior discussions that we had, a potential reduction on corporate income tax together with the extinction of the IOC would not have a meaningful impact to us. Of course, that depends a lot on the level of reduction for the income tax. But I think now, so far what we have been doing is monitoring very closely those discussions, ensuring that we are also taking to the authorities our concerns through the associations that are leading those discussions and where we are part of those. So I think it is too early to tell what could be done, but, you know, there are things that we could consider going forward to let's say, to partially mitigate those impacts. Revising our capital structure strategy could be one of them. But again, I think it is still too early to say exactly what could be done without knowing all the details of a potential change.

Okay, perfect. Great. Thank you, Andrej.

Thank you. The next question comes with Yuri Fernandez with JP Morgan. Please go ahead.

Hi, all. Good morning. Thank you for the opportunity of asking questions. I have a first one regarding Pismo sale. I guess this was announced in late June, I guess June 28. So just confirming there was no benefit on your P&L this quarter. That's the first one. And also, if you can discuss the gain here, because when you bought this, I guess, back in 2021, you paid some $10 million for your stake. And since valuations were higher, we are getting here to 150, 200 million reais gains on these investments you have. So just checking the numbers. So basically, this is in the T&L this quarter. It's going to be in the 30Q only. And also a little bit on the financial impact on this. And I have a second question regarding expenses. I guess you have been very committed to cost lately. So just checking the box, what is your speech for 2024? If we should expect the same commitment on cost for the next year? And also if you can share how much is fixed and how much is variable cost for B2E? Thank you very much.

Thank you, Yuri, for the questions. So, The gain with the PISMO is not recognized in these quarter figures. Fernando will give more details on that.

Yeah, so the transaction is still under analysis by the here in Brazil, CAD, so the deal is not closed yet, so it's a deal that we are mostly passengers of, so it's not something that we can, we don't have any say on it, but we are in a waiting mode, and the gains will only be recognized when the deal is actually closed, which hasn't happened yet, but probably will happen during the third quarter, and we'll have only a financial impact on the financial results. I think that's pretty much it. Sorry, it's not something that is really material.

It's not really, it's not going to change much for the results, but it's still a game for me.

Interesting return on investment, but since it was a small investment, it's not going to move the needle in terms of our of our overall earnings. But it was a very positive investment. And the second one, sorry?

The second one is regarding cost. If you can provide some kind of message for 2024 on expenses and how much is fixed and how much is variable expenses for B3?

So, This is not a one-year effort. We have, as I said, taken the measures to ensure that we are incorporating some of the learnings that we had from that project into our ongoing management, daily management of activities here. Our long-term objective, medium to long term, is to ensure that our expenses, especially in the core business, are growing much more close to the inflation. And I would say in general terms, most of our revenues are almost fixed in nature of our cost structure is pretty much the, I think the more variable part of the expenses, we actually try to give you visibility on that, providing that disclosure of revenue linked expenses. So those were potentially the expenses that have a more variable characteristic, the higher the revenues, the higher the expenses, but if you exclude those, the remainder is primarily composed of personnel expenses and technology expenses. Of course, we believe there is still room to keep seeking for efficiencies there as we evolve, but they are let's say they are less sensitive to the performance of the top line, right? So if volumes increase, they do not increase on the same token. Sorry, they do not have to increase on the same proportion. On the other hand, if revenues decrease, there is not a lot of room to reduce them. I think that's pretty much it. So we will remain with that objective for 2014 and 24 and the following years.

Super clear. Thank you.

The next question comes with Antonio Ruetti with Bank of America. Please go ahead.

Hey Andrea, thank you for your time. So basically, two questions here, one on revenues and one on expenses. On revenues, I was just thinking about pricing and a follow-up on a previous question. If pricing decides its dependence on mix and potential discounts, how prepared are you to share operating leverage with your clients? And so we saw improving margins and now we could have also a stronger competition. So just trying to understand the pricing on your side. And also on expenses, if you could explore a little bit more your discretion on what are the efforts that you can do from now on. So you have that big consultancy program, that provided some savings by the end of last year. So, from now on, is there anything else? What are the projects that you can do? Is it on personnel? Is it on data? Is it on real estate? If you could provide some detail on this. Thank you very much.

Thank you, Antonio. answering the first one on sharing operational leverage, I mean, the way our pricing schedule has been set up, it is structured in a way where automatically we are sharing some of that operational leverage with our customers. As I mentioned, the higher the volume, the higher the discounts that they are So I think we already have some mechanisms in place to do that. If volumes increase substantially and we remain at a different level, as it was the case during the last, let's say, last cycle, and we feel that the level of sharing is not sufficient, we could potentially revisit but I think it is too early to be, let's say, concerned with that. I think we already have mechanisms in place that will allow for that. If we feel in the future that we are in a sustainable level that is significantly higher than the current one and the level of operational leverage that is being shared is not sufficient, we could revisit that. But I don't think that's a concern for now. In terms of expenses, I mean, as I said, we did that project. And as you know, most of our expenses are represented by personnel expenses and technology. So there is still things that can be done on those areas, so areas that we could be examining in terms of seeking more efficiency in teams. There were areas that were not part of their project in last year because, I mean, we did, let's say, a parental analysis here and targeted the more representative areas, but there are still places where that efficiency could be sought. I mean, we have incorporated some of those practices. Every time now there is a proposition to revisit a organization structure, we will be looking at some indicators and metrics to see whether that makes sense, ensuring there is a, let's say, well-designed span of control and other metrics that we will be looking at. There are things that can also bring efficiency. I mean, the continued application of technology, potentially in some areas, the use of artificial intelligence could also improve our efficiency in certain processes and certain activities. So there are still things that can that can be done, and we will be focusing on those as well to ensure that that long-term objective is achieved.

A great caller. Thank you.

Thank you. The next question comes with Pedro Leduc with Itaú BDA.

Please go ahead. Thank you so much for taking the question. Two quick ones, please. First, on average trading margins, we saw a sequential increase slightly, 0.3 bps Q and Q. I'm wondering if we could get your thoughts on how this line could evolve in the second half of the year. I understand there's a lot of mix in here involved, right? Types of investors, incentives. Just if you could share us some color. for modeling purposes, Noah, how we should think about this average trading margins, at least in the second half of this year. Thank you.

Thank you, Pedro, for joining the call and for posting the question. I mean, that's a difficult one, Pedro, because, as I said, there are two main components that will will dictate the behavior of those margins going forward. The first one would be the volumes themselves. So as I said, typically the higher the volume, the higher the discounts. So that could put some, let's say, downward pressure to our margins. On the other hand, a more favorable mix in terms of clients that they are trading could have a positive impact on margin So it is really difficult to try to predict the behavior of these two things and give you a more precise, let's say, estimate of what the behavior margin could be going forward. I mean, I think perhaps the best way to try to do with that is make some of these assumptions in terms of mix and volumes to to simulate what the margin could be going forward. Sorry, I cannot be of any more help.

This was helpful, actually. You say it's a lot to do with mix and volumes, obviously, but in terms of mix, Today, where we stand, is it perhaps the worst or the low in terms of average? The lower BIPs contributor are wearing heavily on your total mix or the heaviest it's ever been?

That's also a tough one, Pedro, because we have customers that pay the highest fees, which are individual investors, at really low levels. So I don't think it's the worst mix to say that, but I think it's only natural that we see a return from individual investors and they gaining more importance on the mix. We can't see a higher margin. But I think the big question mark is when this will happen. Because the first question about the second half, we do not know if it's going to be on the second half. It's only natural to think that we had retail investors as high as about 20, 21% during the pandemic. Now they are around 13% of the volumes. So if they go a little bit higher, we can see an improvement in margins because of that mix. It decreases because of the mix, and it can increase because of the mix on a shorter term like André mentioned.

I think just to add here, I don't know if it is, if we can, as Fernando mentioned, say that this is the worst moment in terms of mix. But on the other hand, I mean, given the scenario that we were discussing, I think we see, let's say, more room for, in the future, in the next months, second half or beginning of next year, for the return of the retail investor to equities than a movement that would reduce even further their participation. So it is definitely a movement. it's an optimistic scenario in terms of the return of these investors to the exchange and to be more representative in terms of the overall trading activity in the market.

Very good. So very useful. Thank you so much. Congrats on the quarter and talk to you on the next one. Bye-bye.

Thanks.

The next question comes with Ian White with Autonomous Research. Please go ahead.

Hi there. Thanks for doing the call. I had a few questions, please. First up on data and analytics, can you just sort of unpack for me a bit what kind of happened there in the second quarter Please, I was just surprised to see organic growth negative year over year. Maybe you could explain a bit about the changes you made on pricing or whether there's anything else planned there. Also, what was the contribution from Nailway, please, in the quarter? That would be interesting. Question two, I was just interested in maybe hearing a bit more about the development of the tokenized issuance platform that you mentioned earlier. How many firms are using that? Are there any savings we might expect to see for B3, possibly into next year? And is this something we could see rolled out to equities in due course? Again, a bit more detail around that would be really interesting, please. And just finally, are there any areas of the business where you think we might see actually some headwinds from lower rates? Obviously, I'm familiar that most of the business is likely to benefit here, but Areas like OTC fixed income perhaps might be sort of geared the other way. Are there any other businesses that maybe have been getting some support from the higher interest rate environment that might reverse a little bit? Thank you.

Thank you. Thank you very much, Ian. I'll try to answer here all of them, but let me know if I missed something here. So First question regarding data analytics. I think the main impact that we saw here was on market data revenues. I think here there are perhaps three main things to highlight. First, I think we started to see clients reducing the number of distribution packages that they were paying for because of a reduction in their customer base activity. So there are here some of the fees that are variable according to the number of users. typically talking about here, brokers and intermediaries, there are paying to distribute that data to their client base. So if they have less clients using, they ended up paying less in terms of usage. So there is an usage component here that explains that reduction. There has also been let's say, clients revisiting the packages that they are, let's say, paying for. So, also, as we have been doing, trying to, let's say, optimize or reduce costs, some of them are opting for lower cost packages that, of course, have, let's say, less information sometimes, so you're not seeing all the trades on the book. You're only seeing the offers on the top of the book. This is one example. So because you're not getting access to the whole book, you end up paying slightly less. So there are those factors explaining explaining the performance of that revenue. And to a smaller extent, there is also some impact from the exchange rate during that period because some of those market data contracts are charged in US dollars. So that's primarily what we have seen. in that, again, now looking forward with a more optimistic environment as we have been discussing with the retail investor at some point returning more intensively to the exchange, potentially those, especially the ones that are linked to usage, could increase again. The second question regarding the tokenized platform, I think it is too early to say. This was more, let's say, almost like an MVP, an experimentation. So far, we haven't seen, let's say, significant or material gains with that, but we need to test better that. So it's more, let's say, an initial attempt to better assess and explore potential efficiencies and gains that could be achieved with the use of that technology. But as I said, again, I think it is too early to predict any of that and a more, let's say, meaningful or intense use of that technology in order parts of the business, but I think we need to try and test those new technologies to see what can bring better results either for the company or for its customers. And the last question you made regarding some potential headwinds with a lower interest rate environment, I think you assessment is correct. Potentially, the business that will be, let's say, more impacted will be the OTC business. Although, as you know, it tends to be a business with much more resilience. So, differently from what we see on the equities market, which is very sensitive to the volumes, there is a significant portion of our revenues that come from the outstanding inventory. So when volumes are growing, revenue grows, but does not grow at the same proportion that we are seeing volumes growing because a lot of that revenue growth is going to be deferred because you're charging a portion significant portion of your revenues on the outstanding inventory of assets. On the other hand, when you have a reduction in volume, so if there is more allocation towards equities and other instruments and lower volumes of corporate income securities or fixed income securities, you do not tend to see the same impact on the revenues because of that different behavior in terms of fees that are charged. So should be the business potentially that could be affected, but it tends to be much more resilient in terms of revenue generation because of the nature of the way the revenues are produced there.

Great stuff. Thank you. Just the only other detail I hoped you might share was the revenue contribution from NAOA in 2Q. Could you possibly provide us with that number, please?

It's around around 15 million reais in the quarter, but. I think that is somewhere in our financials, but if it's not, we can just confirm that to you later on. But it's around 50 million reais in the quarter.

Yeah, you can go to the spreadsheet that we put the quarterly data there, and there is one sheet that is only 49 million reais, but it's on the spreadsheet that we provide with the quarterly data. There is an income statement for now here. Great stuff. Thank you. Thanks for that. Thank you, Ian.

The next question comes with Carlos Gomez with HSBC.

Please go ahead. Hello, good morning. Thank you for the presentation and for the podcast. It's very good. I have two questions. The first one is if you could give us any update, if there is one, on the judicial cases that you're involved in, the about the central bank actions and about the goodwill amortization. And second, can you tell us your current approach to further investments in data analytics companies? Are you done or do you think you might still explore opportunities in this field? Thank you.

Thank you, Carlos. In relation to the first point, unfortunately, there are no updates. So, again, we remain very optimistic. in the outcome of those discussions, but there hasn't been any significant developments during the last period. Regarding your second question, as we have been discussing, I think the two targets that we had identified and that we believed were important to deliver our strategy on data have been acquired. Those were Neway and Neurotech. We don't have any other significant targets on the pipeline. We are now, I think the main focus now it is in executing the strategy with the two assets now together. seeking for the revenue synergies that we believe we are able to capture. So we have a lot on our plate now, and I think the main objective and challenge now is to execute the strategy now that we have the pieces that we need. We might have a small add-on here and there, but Definitely nothing of the size of those two companies. As I said, the main focus now is to execute that strategy and extracting and seeking to extract the synergies mainly on the revenue side that we believe we can capture now with those two businesses together with B2B.

Thank you very much.

Thank you. The next question comes with Caio Prato with UBS.

Please go ahead. Excuse me, sir. You may proceed. Your mic is open. Hey can you hear me? Yes.

Okay, so thank you, Andrea and Fernando, for the opportunity. Quick follow-up on expenses, please. When we look to your adjusted expense and annualized what was already reported, this is turning below the guidance for the full year. So my question is, if this is coming indeed better than expected and you could review the guidance at some point, or is it expected an acceleration in the second half of this year? And if so, in which lines we should see this acceleration, please?

Thank you, Kyle, for your question. If you look, typically we tend to have a second quarter of the year. We have some seasonality here in the behavior of expenses. You have to remember that one of the main items on our expenses, which are the personnel expenses, have an annual bargaining adjustment which takes place in August. It is true, though, that we are looking at a more, let's say, lower level of inflation projected for this year. If you recall, the adjustment for last year was around 10%. So we tend to see some acceleration on our expenses during the second half. One of the reasons is what I just described, the annual bargaining adjustment. There are other things that also typically take place during the second half of the year, some events and these sort of things. So that could be potentially some acceleration during the year. But again, we will definitely be much closer to the lower end of our guidance. than to the upper end. So that remains our target and our focus.

Okay, thank you very much.

Thank you. That does conclude today's questions and answer session. I would like to invite André Milanes to proceed with his closing statements. Please go ahead, sir.

Thank you very much for joining our call, for your continued support. My thanks to all the team here, the B3 team, for these quarter results, for the finance team that has helped to prepare all these and deliver that to you. And I think that's it. Thank you very much. Have a nice Friday and weekend ahead of you. Bye-bye.

Thank you. That does conclude B3A's audio conference for today. Thank you very much for your participation. Have a good afternoon. And thank you for using Chorus Call Brazil.