Eduardo Nishio

Eduardo Nishio questioned the dynamic between the worsening 90-day NPL (and 15-90 day NPL) and the dropping cost of risk, asking how this dynamic is expected to evolve throughout 2026, particularly concerning the portfolio mix.

Answer

CFO Gustavo Alejo Viviani explained that the bank is actively working on portfolio mix composition for 2026, with shifts towards SMEs, consumer finance, and high income, and reductions in low income and some agribusiness portfolios. He acknowledged natural NPL pressure in Q1 but emphasized focusing on full-year evolution and maintaining a controlled cost of risk. He reiterated that significant changes in the mix are expected by the end of 2026.

Eduardo Nishio questioned the dynamic between worsening 90-day NPL and 15-90 day NPL, alongside a dropping cost of risk. He asked how this dynamic is viewed for 2026 and how the cost of risk will improve, specifically through portfolio mix.

Answer

CFO Gustavo Alejo Viviani explained that the mix composition is evolving, with increased relative shares in SMEs, consumer finance, and high income, while reducing low-income and some agribusiness portfolios. He acknowledged natural NPL pressure in Q1 but emphasized focusing on the full year's evolution. He stated that Santander maintains a controlled cost of risk, and the mix changes, which are part of a clear roadmap for 2026, will continue to shift the portfolio composition to improve asset quality.

Eduardo Nishio congratulated the bank on its expense management, noting the achievement of near-zero nominal costs ahead of schedule. He asked about the next steps for expense reduction, including the expected final footprint and number of branches. His second question was a follow-up on market NII, asking if a positive result is expected in any quarter next year.

Answer

CEO Mario Leão clarified that 'zero nominal expenses' is a directional mindset for the coming years, not a quarter-by-quarter guidance, acknowledging seasonalities. He stated the bank aims to accelerate expense management without hurting growth, driven by converging service models to digital channels, reducing the need for physical stores and remote channel headcount. CFO Gustavo Alejo explained that market NII's future performance depends on average Selic rates, future interest curves, and market making, making it complex to predict a positive result for any specific quarter next year. He committed to transparency on the three components of market NII.

Eduardo Nishio congratulated the bank on its expense management, noting the achievement of a near-zero nominal cost target. He asked about the next steps for expense reduction, including expectations for the final footprint and number of branches. He also followed up on market NII, asking if a positive result could be expected in any quarter next year.

Answer

CEO Mario Leão clarified that 'zero nominal expenses' is a long-term direction, not a quarterly guidance, due to seasonalities and investments. He emphasized accelerating expense management without hurting growth, aiming to increase revenues while keeping other lines stable. He mentioned optimizing stores and redefining the remote service model to be more chat-based, reducing headcount needs. CFO Gustavo Alejo explained that market NII's positivity in 2026 depends on average Selic rates and future interest curves. He stated that the ALM process, once finalized, would make market NII 'definitely better' than in 2025, with less risk, but absolute positivity depends on exogenous and endogenous factors like market making performance.

Eduardo Nishio from Genial asked about the competitive advantage of Itaú's strategy to hedge its capital in foreign operations and the associated trade-off with the cost impacting NII with the market.

Answer

CEO Milton Maluhy Filho explained that the hedge is critical given the significant size of Itaú's operations outside Brazil. The strategy provides stability to the capital ratio, which is essential for predictable growth and dividend payouts in a volatile environment. While this carries a cost that affects NII with the market, it is a deliberate trade-off to reduce volatility and operate with a more efficient capital buffer.

Asked about the treatment and timing of the recovery from the Americanas case, the significance of the agribusiness portfolio in the second half, and the bank's intention regarding the renewal of its contract with BB Seguridade.

Answer

For Americanas, a significant cash recovery will be posted in the next quarter. The agribusiness portfolio is expected to be a major driver in the second half due to a record volume of resources in the new crop plan. Regarding BB Seguridade, there is no possibility of not renewing the contract; discussions are focused on ensuring the partnership's terms are fair and maximize value for Banco do Brasil.

Asked about the outlook for Net Interest Income (NII) and provisions in 2024, specifically the behavior of market NII versus client NII. He also inquired about the bank's position in Argentina with its Patagonia subsidiary, noting a competitor's recent sale and asking about potential negative capital impacts.

Answer

For 2024, NII is expected to grow in line with the loan portfolio, with opportunities for better spreads on the funding side. Regarding Argentina, the bank's position is very different from the competitor who sold; Patagonia is a sound, conservative bank with a strong brand and they have no intention to sell. Despite hyperinflation, the bank generates a positive net result and has a high ROE of 23.9%.

Eduardo Nishio asked for more details on the new client platform's role in reducing cost-to-serve and requested the bank's internal calculation for the 'implicit profit' derived from its guidance.

Answer

Executive Marcelo de Noronha explained the new platform leverages Bradesco Expresso for a variable cost-to-serve model, complementing footprint reduction. On the guidance question, CFO Cassiano Scarpelli stated that while they don't disclose the exact figure, the market consensus range of BRL 17.5 billion to BRL 18.5 billion is 'quite adequate' and aligns with their internal view.

Eduardo Nishio from Genial Investimentos asked for more details on the new client platform, specifically how it will reduce the cost-to-serve beyond physical branch reductions. He also asked management to share their internal calculation for the 'implicit profit' derived from the annual guidance.

Answer

Executive Marcelo de Noronha highlighted the Bradesco Expresso platform as a key initiative to lower the cost-to-serve via a variable cost model, noting other initiatives are also underway. On the implicit profit, CFO/CTO Cassiano Scarpelli stated that while the bank doesn't provide a specific number, the market consensus range of BRL 17.5 billion to BRL 18.5 billion is 'quite adequate' and close to their internal figures.