B3 Sa Brasil Unsp/Adr

Good morning, ladies and gentlemen, and welcome to the audio conference call of B3's earnings results for the fourth quarter of 2023. We would like to inform you that all participants will be in listen-only mode during the company's presentation. After the company's remarks are completed, there will be a Q&A session when further instructions will be given. 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 now like to turn the conference over to André Milanes, B3 CFO, who will begin the conference and be joined by Fernando Campos, Investor Relations Associate Director. Please André, you may proceed.

Thank you. Good morning and thank you everyone for joining our fourth quarter results. I'll start with a few remarks and then I'm going to hand over to Fernando to go into a little bit more detail about the figures for the quarter. We'll try to be brief so we can leave more room open for Q&A. We had an environment during the fourth quarter marked by uncertainty, especially surround the level of interest rates in the major global economies, particularly when the interest rate cuts would begin. In Brazil, although we have seen that process of rate cuts already starting, the level of interest rate remained still at high levels, which I guess prevented a more meaningful recovery, particularly on the equities market. So as I said, a challenging quarter for the listed segment, which was offset by a good performance of our other segments. Here are some highlights for the revenue coming from the OTC and fixed income business, which was, I guess, favored by that environment of interest rates. The revenues that we had during the quarter coming from the Desenhalla program, the performance on the infrastructure for financing unit and the consolidation of Neurotech, which also helped in the comparison to the fourth quarter of 22 and impacted our data segment. In comparison to the fourth quarter, we saw a decrease of 3%, fourth quarter of 22, and stable revenues in relation to the third quarter. On the expense side, as we have been discussing throughout 2023, we were aiming at the lower end of our guidance. That was exactly the number that we ended up delivering. If we compare 2023 to 2022, our expenses remained below inflation, especially if we exclude the impact of Neurotech, which was not present in our numbers in 2022, which we believe was a positive result of our efficient gains initiative that was carried out at the end of 2022. Regarding the growth during the quarter, I think it is worth highlighting and we can potentially explore that in more detail during the Q&A session. Two main non-recurring items that have contributed to the growth that we saw during the quarter. First, there were the expenses related to the operation and development of the platform for the Disney Hollow program. As I said, that contributed on the revenue side, but also on the expenses side and of course, this becomes giving our operational leverage and the size of our expenditure becomes more relevant for the expenses than it does for the revenues. But more than the project itself, I think it has been also an opportunity for us to develop a product which is now an existing product that was reinforced and improved, including in our subsidiaries PD tech portfolio, which could bring new opportunities in the future. And another highlight was that we saw here an opportunity to anticipate contributions to our self-regulatory activity for the following years, in our view at least, that would be sufficient at least to fund our self-regulatory activity for the next two years. And that was only possible given the exercise and the management of our budget for the year during the quarter. In comparison to the third quarter, I think it is, besides those two items that I had already mentioned, we had a quarter where you have the full impact of salary adjustments, which take place in August, some project acceleration, and some other seasonal expenses that typically take place during the last quarter of the year. I'm going to call Fernando now to talk a little bit more about the operational performance, the revenues, and I'll come back after that.

Thank you, Andre. Good morning, all. Starting with the equity segment, ADTV of cash equities reached 24.3 billion reais in the quarter, a drop of 25% year on year, given the impacts of the elections that we had on the fourth quarter of 2022. and the growth of 2% quarter-on-quarter, which is below the recovery that we historically see in the fourth quarter when compared to the third quarter, which is a weaker quarter. We had a pretty stable market cap, so the turnover stood at 136%, pretty much in line with the last quarter. Regarding margins and fees, the stability compared to the fourth quarter 2022, even though we had lower volumes in the 4Q23, reflects the lower participation of foreigners and retail, which pay a higher fee compared to the local institutional investors, which had a higher participation during the quarter and they pay a lower fee. And we had more volumes traded through market-making and liquidity provider programs, which are incentivized, so they also have an impact on margins. On listed derivatives, despite the decline in revenue in low single digits, we see that the performance is good. We had some price adjustments, mainly on the interest rates in BRL contracts, which provided liquidity and volume for the contract. We had an all-time high record in those kind of contracts for the year. So we had a good operational performance with a slight decline in revenues. In OTC, it continues to perform well with the current level of interest rates. new issuances and average outstanding balance of bank funding instruments grew 3% and 8% compared to the 4Q22 and 3Q23 respectively. And also it's worth highlighting the strong growth in Treasury Direct, growth in the outstanding balance of 26% and 4% in relation to the 4Q22 and 3Q23. and the solid performance that we have in derivatives as well, with a growth of 29.9% year-on-year of issuance and outstanding balance, respectively. So, with this, revenue of OTC grew by 15% year-on-year. Finally, in technology data and services, it's worth highlighting the growth in OTC utilization line, a growth of 8% versus the 4Q22 and 2% 3Q23. And it grows with the fund industry in Brazil. And it's well, like Andre mentioned, it's also worth note that the data revenue includes Neurotech revenue for the quarter. Returning to Andre to talk about other highlights of the results and some strategic advancements.