Antonio Reale

Antonio Reale followed up on taxes, asking for an explanation for the sharp quarter-over-quarter decline in the 'tax withholding in funds' line, which appeared unrelated to the revenue mix. He also inquired about XP's strategic shift towards a B2C model, considering the role of AI as both an opportunity for lower expenses and a potential vulnerability to replication by other players.

Answer

CFO Victor Mansur explained that the 'tax withholding in funds' line is difficult to analyze in isolation and will not be disclosed after 2026 due to group restructuring, reiterating that the overall tax rate is driven by the revenue mix. CEO Thiago Maffra clarified that XP's AI strategy focuses on 'augmented advisors,' enhancing human capabilities rather than replacing them. He detailed initiatives using AI to improve advisor-client relationships, reduce operational workload, and provide better service, emphasizing that for high-value clients, trust-based human interaction remains crucial.

Antonio Reale followed up on taxes, asking about a sharp QoQ decline in the tax withholding in funds line, which seemed unrelated to the revenue mix. He also questioned XP's strategic shift towards a B2C model in the context of AI, considering it an opportunity for lower expenses but also a potential trap if mimicked by other AI players.

Answer

Victor Mansur, CFO of XP, explained that the tax withholding line is difficult to analyze in isolation and will not be disclosed after 2026 due to group restructuring, reiterating that the overall tax increase was due to the revenue mix. Thiago Maffra, CEO of XP, clarified that XP's AI strategy is not about replacing human financial advisors but enhancing them, improving relationships, reducing operational workload, and boosting productivity. He noted that while 100% digital is possible for smaller segments, high-value clients require human interaction due to the trust-based nature of the business.

Antonio Reale from Bank of America inquired about BBVA's guidance for Turkey, focusing on the expected trends for Net Interest Income (NII) and cost of risk following a recent rate hike. He also asked about the strong Q1 loan and deposit activity in Spain and when management expects NII to trough in that region.

Answer

CEO Onur Genç explained that the guidance for Turkey's net profit was revised to 'somewhat below €1 billion' due to higher-than-expected inflation and interest rate forecasts, providing specific profit sensitivities for each macro driver. CFO Maria Gomez Bravo addressed Spain, stating that the bank's active management of its balance sheet, including increasing its ALCO portfolio and reducing rate sensitivity, supports the guidance for only a slight NII decline for the year despite a more negative rate outlook. She noted Spain's economic resilience should sustain strong activity levels.

Antonio Reale from Bank of America inquired about the outlook for Turkey, specifically the expected trends for Net Interest Income (NII) and cost of risk following a recent rate hike. He also asked about Spain's strong Q1 activity, the potential impact of tariffs, and when NII might reach its lowest point in the year.

Answer

CEO Onur Genç explained that the profit guidance for Turkey was revised slightly below €1 billion due to higher-than-expected inflation and interest rates, providing specific sensitivities for each macro factor. CFO Maria Gomez Bravo addressed Spain, reaffirming the guidance for a slight NII decline despite lower rate expectations, supported by a reduced NII sensitivity to 4% and a €5 billion increase in the ALCO book. Onur Genç added that Spain's NIM actually rose 7 bps in the quarter.

Antonio Reale from Bank of America inquired about the flexibility of the cost base in Mexico should revenues disappoint, and asked for details on Turkey's interest rate duration mismatch and NIM trajectory for 2025.

Answer

Executive Maria Gomez Bravo explained that Mexico's cost base has significant flexibility through variable sales compensation and adjustable IT project spending. Executive Onur Genç added that the base case for Mexico remains strong growth. For Turkey, Genç stated that the bank increased its duration gap from two to five months in 2024, positioning it to benefit if interest rates fall from 45% to the bank's 30% year-end target.

Antonio Reale of Bank of America asked why the parent company (AG) CET1 ratio saw a minimal increase despite a $13 billion capital repatriation. He also requested details on the Swiss P&C business's rate sensitivity and options to mitigate NII headwinds.

Answer

CFO Todd Tuckner explained the limited impact on the AG CET1 ratio was due to a dividend accrual from the AG to the group holding company, which was necessary to address capital structure issues like double leverage. For P&C, he said mitigants include growing non-NII revenue, but with a flat, low-rate curve, hedging options are limited, and they must wait for a change in the rate environment.

Antonio Reale from Bank of America asked about CaixaBank's ability to defer profitability from 2024 to 2025 by front-loading charges and sought details on the assumptions behind the upgraded Net Interest Income (NII) guidance, particularly regarding deposit growth and hedging.

Answer

CEO Gonzalo Gortázar stated that the bank does not manage profitability between years and is confident about future performance. CFO Javier Pano explained the NII upgrade is primarily driven by strong deposit volumes, with about half of the Q2 inflows being seasonal. He confirmed the increased hedging aims to limit NII sensitivity and noted that the 2025 consensus for NII still has upside potential, increasingly based on volumes.

Antonio Reale from BofA Securities asked about CaixaBank's ability to defer profitability into future years, the key assumptions behind the upgraded Net Interest Income (NII) guidance, and the split of NII benefits from deposit growth and hedges between 2024 and 2025.

Answer

CEO Gonzalo Gortázar stated the bank does not manage profitability between years and is confident about future performance driven by strong activity. CFO Javier Pano explained the NII guidance upgrade is primarily based on higher-than-expected deposit volumes, driven by a high household savings rate, rather than rate changes. He confirmed the bank continues to add hedges to limit NII sensitivity and sees upside to the 2025 consensus NII, increasingly based on volume growth.