Eduardo Rosman

Eduardo Rosman asked about the potential for Nu to be disrupted by AI, or if the company sees itself as a potential winner in this technological transformation, requesting elaboration on the risks and opportunities.

Answer

David Vélez, Founder, Chief Executive Officer, and Chairman, stated that AI presents both a challenge and a significant opportunity, with Nu viewing it as more of an opportunity. He explained that business models relying on simple brokering are most at risk, while credit revenue, due to its capital intensity and proprietary data, is more sustainable. Vélez highlighted opportunities in cross-selling and new products, enabled by AI, to increase ARPAC from its current $15. He also noted AI's clear benefits in cost reduction across functions like customer service and compliance, positioning Nu to be a winner given its lower cost structure compared to incumbent banks.

Eduardo Rosman asked David Vélez about the potential for Nu to be disrupted by AI, or if Nu is positioned as a potential winner in this technological transformation.

Answer

David Vélez, Founder, Chief Executive Officer, and Chairman of Nu Holdings, stated that AI presents both a challenge and a significant opportunity, with the latter outweighing the former for Nu. He explained that business models relying on simple data brokering are at higher risk, while credit revenue is more sustainable due to capital intensity, regulation, and proprietary data, where AI plays a crucial role. Vélez highlighted opportunities on the revenue side, such as increasing ARPAC through cross-selling and new products enabled by AI, and on the cost side, where AI enhances functions like customer service, compliance, and AML. He concluded that Nu is well-positioned to benefit from AI given its lean cost structure compared to incumbent banks.

Eduardo Rosman from BTG Pactual asked about the significance of recent high-profile management changes, including the new CTO, and how these additions relate to Nubank's international expansion strategy.

Answer

David Vélez, Founder, CEO & Chairman, explained that the new hires are a strategic move to prepare for the next 5-10 years, positioning Nubank to compete in the "world leagues" of technology and finance. He stated the additions strengthen their leadership in Latin America and prepare the company for future internationalization beyond its current markets.

Eduardo Rosman of BTG Pactual asked for clarification on recent strategic messaging, referencing CEO David Vélez's comments about expanding beyond Latin America and his subsequent return to day-to-day operations. Rosman questioned if this signaled a renewed, singular focus on Brazil and Mexico, potentially delaying broader international expansion.

Answer

CEO and Founder David Velez-Osomo affirmed that Brazil, Mexico, and Colombia remain the company's primary focus due to the significant monetization opportunities. However, he reiterated that the company's long-term vision is global and that they are actively planning for internationalization over the next 5-10 years. He stated that current work on improving platforms and systems will ultimately support any future expansion beyond existing markets.

Eduardo Rosman questioned whether the credit underwriting outperformance seen in Nu's credit card portfolio could be replicated in its rapidly growing unsecured personal loans business.

Answer

President and COO Youssef Lahrech expressed confidence that the same dynamics driving outperformance in credit cards are applicable to unsecured personal loans. He explained that Nu's 'low and grow' strategy—starting customers with small ticket sizes and increasing exposure based on performance—along with increasingly precise risk assessment models, is a core capability that extends across product classes, including unsecured lending.

Eduardo Rosman asked for an update on Mexico, questioning if the market is ready for a Brazil-like impact and if it could become a relevant contributor to Nu's results within the next three years.

Answer

CEO David Velez-Osomo stated that Mexico could be 'another Brazil' for Nu, citing higher income per capita but lower bank penetration as both an opportunity and a challenge. He noted that cracking credit for the unbanked will take longer and requires disciplined, methodical testing, leading to 'zigzagging' growth. Velez affirmed that Mexico is on a path to move the needle and become relevant, with an upside case of being as big as Brazil if digital payments infrastructure develops favorably.

Eduardo Rosman inquired about XP's ambition to become Brazil's leading investment platform by 2033, asking for details on the metrics used (market share, revenue, client base) and whether current strategies or enhanced banking/credit capabilities would be required. He also asked about the practical implications of Thiago Maffra's entry into the controlling group.

Answer

CEO Thiago Maffra clarified that leadership by 2033 refers to market share, a goal derived from internal 7-year plans. He explained that achieving this involves the 'third wave' of democratizing wealth planning for retail clients, alongside strategic changes in incentives, segmentation, and value propositions across different client segments. Maffra stated that his entry into the controlling group did not change his personal approach but strengthened long-term alignment among key executives.

Eduardo Rosman asked about XP's ambition to become Brazil's leading investment platform by 2033, inquiring about the specific metrics used to define leadership (market share, revenue, client base) and whether the current strategy is sufficient or if more banking and credit capabilities are required. He also asked about the practical implications of his entry into the controlling group for Thiago Maffra.

Answer

Thiago Maffra, CEO of XP, clarified that the 2033 leadership goal refers to market share, achievable through the 'third wave' strategy of democratizing wealth planning for retail clients, alongside refined segmentation and value propositions. He noted that different strategies are applied across segments, with Private Banking accelerating and retail adopting a goal-based, low human touch approach. Maffra stated that his entry into the controlling group did not change his personal approach, as he has always acted as an owner, but it strengthens long-term alignment among key executives.

Eduardo Rosman inquired about the sustainability of the strong wholesale business performance into Q4 and sought more details on XP's strategy to increase its warehousing book in Q4, particularly regarding the risks associated with low corporate spreads and an upcoming election year.

Answer

CEO Thiago Maffra confirmed expectations for continued strong wholesale banking performance in Q4, noting the second half of the year is typically stronger. CFO Victor Mansur addressed the warehousing strategy, acknowledging tight credit spreads but emphasized holding high-quality assets and a higher portfolio turnover velocity. He explained the plan to warehouse more assets in Q4 to sell in Q1 2026, anticipating a lack of DCM activity early next year.

Eduardo Rosman inquired about the expected performance of the wholesale business in Q4, specifically if a slowdown is anticipated, and sought more details on the strategy to increase the warehousing book in Q4, questioning its risk given low corporate spreads and an election year.

Answer

Thiago Maffra stated that the wholesale banking is expected to show good performance for Q4, similar to the stronger second half of the year. Victor Mansur elaborated that while credit spreads are tight, the strategy involves holding high-quality assets with a higher turnover velocity, making them less susceptible to volatility. He also mentioned warehousing assets in Q4 to sell in Q1 2026, anticipating a usual lack of DCM activity at the beginning of the year.

Eduardo Rosman from BTG Pactual inquired about XP's capital generation and distribution strategy, noting that while the capital base is growing faster than net income, buybacks and dividends are below last year's levels, and asked if an acceleration in shareholder returns could be expected.

Answer

Chief Financial Officer Victor Mansur explained that net income is outpacing Risk-Weighted Assets (RWA) growth, creating capital leverage. While potential changes in tax regulations might lead to warehousing more assets, he reaffirmed the company's commitment to its target of paying out over 50% of profits in 2025, citing a strong CET1 ratio of 18% which provides ample room for distributions. The decision between dividends and buybacks will depend on the stock price and board approval.

Eduardo Rosman from BTG Pactual inquired about XP's potential to increase its Return on Equity (ROE) towards the 30% level of its ROTE and whether the company's capital payout target of over 50% is conservative given its strong capital generation.

Answer

CFO Victor Mansur confirmed that XP expects ROE to rise as risk-weighted assets grow slower than net income, gradually closing the gap with the higher Return on Tangible Equity (ROTE). He also agreed that the 50% payout target could be seen as conservative and may end up being higher, consistent with patterns from previous years.

Eduardo Rosman asked about the competitive landscape with banks, focusing on the regulation of tax-advantaged instruments like LCIs and LCAs. He noted a recent acceleration in their issuance and inquired about the potential impact on XP's business if these rules were relaxed.

Answer

CEO Thiago Maffra acknowledged that while high interest rates favor banks, XP has developed effective strategies, including partnerships and warehousing, to compete with instruments like LCIs and LCAs. He stated that XP is now near competitive parity, and any potential regulatory changes are not expected to have a significant impact. Maffra also expressed confidence that the BRL 20 billion quarterly net new money target should be viewed as a floor.

Eduardo Rosman asked for details on capital allocation, including the expected growth of Risk-Weighted Assets (RWA), potential for scale efficiencies, the possibility of issuing Tier 1/Tier 2 capital, and the sustainable payout ratio for the next two years.

Answer

CFO Victor Mansur confirmed there is operational leverage in RWA, with revenue growing faster than assets. He stated that a payout of 50% or more of net income is expected for 2025 and 2026 to meet the BIS ratio guidance, after which the payout should normalize around 30%.

Eduardo Rosman asked about the worsening delinquency in the low-income segment, seeking to understand if it's a generalized trend or specific to Santander due to portfolio reduction. He also asked for any insights into a potential lower income statement for this segment.

Answer

CFO Gustavo Alejo Viviani explained that Santander's strict recovery and renegotiation policies, which have not changed, contribute to the observed impact when there's pressure in the low-income segment. He noted that while there's pressure in low income, the bank is in a de-risking process, allowing this flow to continue as they recycle parts of the portfolio. He mentioned that a lower income statement for this segment is anticipated but not yet observed.

Eduardo Rosman questioned whether the worsening delinquency in the low-income segment is a generalized market trend or specific to Santander Brasil due to its portfolio reduction, and if there's any data on lower income statements for this segment.

Answer

CFO Gustavo Alejo Viviani stated that while a lower income statement is anticipated, it's too early to confirm. He explained that Santander Brasil's strict recovery and unchanged renegotiation policies contribute to the observed impact in low-income delinquency. He also mentioned the ongoing de-risking process and potential recycling of low-income clusters with profitability potential.

Eduardo Rosman of BTG Pactual asked for confirmation on a one-off provision reinforcement by the parent group and its impact on Brazil's results. He also inquired if the bank is observing the same worsening NPL trends in vehicle financing that a competitor had highlighted.

Answer

CEO Mario Roberto Opice Leão confirmed the parent group used proceeds from an asset sale to preemptively increase provisions for Brazil under IFRS 9, harmonizing it with local GAAP without impacting local results. On vehicle NPLs, management stated they have not seen deterioration within their target high-rating customer segments, as they have maintained a strict and consistent risk appetite.

Asked about the competitive landscape of the Payroll loan business, particularly how Santander plans to compete with digital banks offering very low rates and how they will retain customers and profitability in this segment.

Answer

The executive detailed a multi-pronged strategy: leveraging their strong franchise in private payrolls which offers more pricing flexibility, digitalizing the client experience, and redesigning their physical store model to more efficiently serve public payroll (INSS) clients. They are integrating the acquired Olé for efficiency gains and emphasized that they are focused on profitability, not just a race for market share.

Eduardo Rosman asked for StoneCo's view on competitors offering free PIX transactions and inquired about the competitive landscape for client deposits and potential pressure on remuneration.

Answer

Strategy & Marketing Officer Lia Machado de Matos described free PIX offers as a common tactic that StoneCo also uses selectively within bundles. She explained that deposit growth is a direct result of client engagement with Stone's expanding ecosystem of financial tools, which provides more reasons for clients to keep their funds within the platform, rather than being driven by remuneration pressure.

Eduardo Rosman asked about the drivers behind the strong performance of StoneCo's banking solution and inquired about the company's perspective on initiating dividend payments, given its significant excess capital and ongoing share buyback program.

Answer

Lia de Matos, an executive, attributed the banking success to effective bundling of payments and banking services and an evolving product roadmap, which drives client engagement and causes deposit growth to outpace TPV growth. Regarding capital return, CEO Pedro Zinner and executive Mateus Schwening highlighted that over BRL 2 billion has already been returned via buybacks, demonstrating a commitment to shareholders. They noted that while a framework for excess capital is established, the specific method of future distributions (dividends vs. buybacks) is still under evaluation.

Eduardo Rosman inquired about the performance and future expectations for the private payroll loan product, specifically how Inter & Co's user experience and personalization could enhance its success and what market share the company anticipates.

Answer

SVP Alexandre Riccio de Oliveira stated the product is performing well, with the portfolio approaching BRL 1 billion and in-app sales nearing 40%. He noted that delinquency is trending better than expected, potentially leading to an ROE above 30%. Global CEO João Vitor Nazareth Teixeira de Souza added that excluding portability effects, Inter's market share is already 15-20%, viewing the product as a perfect strategic fit due to its digital nature and strong client value proposition.

Eduardo Rosman from BTG noted that the credit business's ROI is above the cost of capital and asked if future efficiency gains could increase the bank's risk appetite, potentially leading to more growth and reinvestment rather than higher payouts.

Answer

President & CEO Milton Maluhy Filho agreed that improved efficiency opens space to enter credit operations and client segments that are currently not viable due to profitability constraints. He affirmed that the bank's primary objective is to reinvest capital at adequate returns, and initiatives like the One Itaú migration will create opportunities for growth in underserved client pockets, which is preferable to simply increasing payouts.

Eduardo Rosman of BTG Pactual asked about the future drivers of value generation for Itaú, questioning where growth will come from now that the bank has achieved high performance levels in a slow-growing economy.

Answer

CEO Milton Maluhy Filho outlined several growth avenues, emphasizing the 'One Itaú' initiative, which is migrating 15 million clients to a full-bank digital experience, creating significant cross-selling opportunities. He also pointed to strong performance in wholesale and agribusiness, the launch of 18 new products, and a continued focus on cost efficiencies, now led by CFO Gabriel de Moura, as key future value drivers.

Eduardo Rosman asked about the medium-term strategic importance of the 'One Itaú' super app, questioning if it is a core initiative or merely an optionality for the bank.

Answer

CEO Milton Maluhy Filho affirmed that 'One Itaú' is a core, transformational journey for the bank with very high internal expectations. He highlighted the success of the initial pilot, which saw a 98% migration rate, and shared plans to migrate approximately 2.5 million clients this year. He described it as a long-term project central to the bank's strategy, built upon significant IT modernization to provide a holistic client experience.

Eduardo Rosman of BTG Pactual asked about the size and future potential of government-backed and collateralized loan portfolios, and how they contribute to risk-adjusted returns and customer monetization.

Answer

CEO Marcelo Morojin stated that the market volume for these programs has grown significantly and Bradesco has gained market share. He emphasized that these loans build long-term, profitable customer relationships that generate fee income. He clarified that the bank's growth strategy is diversified across many fronts, including credit cards, consortiums, and investment banking, not just these specific loan types.

Asked about the magnitude and future potential of government-backed collateralized loan portfolios, and whether they are a path to higher returns or simply a way to reduce cyclicality.

Answer

The market for government-backed programs has grown significantly, and the bank has gained share. While these loans offer good risk-adjusted returns and build long-term client relationships, the bank's growth strategy is diversified. It also includes credit cards, consortiums, investment banking, and expanding into other attractive segments like used vehicle loans to achieve a balance of growth and profitability.

Eduardo Rosman asked about the drivers behind the significant leap in profitability and management optimism between Q4 2024 and Q1 2025, questioning if the strong results were a surprise and what specifically caused the improvement.

Answer

An executive attributed the strong performance to the successful execution of their plan, particularly the high penetration within their existing customer base, which fueled quality loan growth. He also highlighted better-than-expected productivity gains from technology squads and strong results from the investment bank. Executive Cassiano Scarpelli added that a new cultural model has led to exceptionally high employee engagement and determination, which is a critical factor in their success.

Eduardo Rosman asked about the impact of worsening macroeconomic conditions on the bank's risk appetite and sought details on the structure of the new variable remuneration plan.

Answer

Executive Marcelo de Noronha characterized the bank's risk appetite as 'moderate,' noting that credit approval rates remain below 2019 levels, particularly for SMEs, ensuring disciplined growth. He explained the new variable remuneration plan is more meritocratic, tying compensation more directly to the performance of an individual's business unit, and is already effective for the second half of the year.

Eduardo Rosman of BTG Pactual asked about the impact of worsening macroeconomic conditions on the bank's risk appetite for the upcoming quarters. He also requested details on the recently announced changes to the variable remuneration plan, particularly its short-term versus long-term focus.

Answer

Executive Marcelo de Noronha characterized the bank's risk appetite as 'moderate,' noting that credit approval rates remain below 2019 levels, especially for SMEs, demonstrating a cautious approach. Regarding compensation, he described the new variable plan as more meritocratic, tying remuneration more directly to individual business unit performance. He confirmed the new structure is already effective for the second half of 2024.

Questioned the 2024 outlook, noting that market consensus projects flat profit for the bank, which seems to contrast with the company's more optimistic tone. He asked for more detail on the bank's view of NII performance and provisions for the next year, and whether an increase in the bottom line is achievable.

Answer

The executive expressed a very positive view for 2024, expecting high single-digit earnings growth. This optimism is based on a more benign economic scenario with falling interest rates, stable spreads despite rate cuts, and strong growth drivers in agribusiness and individuals portfolios. They believe they have the capacity to grow earnings, contrary to some market expectations.