Tito Labarta

Tito Labarta asked about Nu's expenses, specifically regarding the investments needed for global expansion in 2026, particularly in the U.S. He also sought clarification on the significant jump in Q4 accounting P&L expenses, including marketing and G&A, and their specific drivers.

Answer

David Vélez, Founder, Chief Executive Officer, and Chairman of Nu Holdings, stated that U.S. investments in team building and product are de minimis for 2026, with marketing partnerships covering core markets, the U.S., and future markets. He emphasized a targeted, disciplined strategy for the U.S. in specific niches. Guilherme Lago, Chief Financial Officer, explained that the Q4 marketing expense increase was a traditional seasonal spike. Other increases were incorporated into tax breaks related to technology investments (LaterBrain recognized as OPEX, driving tax efficiency). He reiterated that there were no extraordinary or non-recurring items beyond the three one-offs previously mentioned: the DTA reassessment, Prosofipo levy, and return-to-office provisions.

Tito Labarta asked for more details on Nu's 2026 investment year, specifically regarding the global expansion and necessary investments in the U.S. following conditional bank charter approval. He also sought clarification on the specific drivers for the significant jump in marketing and G&A expenses in Q4 2025.

Answer

David Vélez, Founder, Chief Executive Officer, and Chairman, stated that U.S. investments in 2026 would primarily focus on team building and product, expected to be de minimis and not a significant source of investment for the launch. He acknowledged some increase in marketing partnerships related to core markets and potential future markets, as well as team increases for the U.S. launch, but reiterated that these are not expected to be significant in 2026. Guilherme Lago, Chief Financial Officer, added that the marketing increase in Q4 2025 was a traditional seasonal spike. Other increases were incorporated into tax breaks related to technology investments, driving tax efficiency, with no other extraordinary or non-recurring items beyond the three previously mentioned moving parts (DTA, PROSOFIPO, return-to-office provisions).

Tito Labarta of Goldman Sachs asked how Nubank thinks about balancing its rapid deposit growth with loan growth, and if they would consider slowing deposit intake. He also followed up on the optimal gross profit breakdown between credit, fees, and float.

Answer

CFO Guilherme Lago explained that they are comfortable with the current loan-to-deposit ratio and view a strong deposit franchise as a strategic necessity for becoming customers' primary bank, especially in Brazil. For the follow-up, he stated that credit is expected to be the main driver of ARPAC growth, aiming to close the gap between Nubank's current $12 ARPAC and the incumbent banks' $45 ARPAC, as credit represents the largest portion of the retail banking profit pool.

Tito Labarta of Goldman Sachs asked about the long-term growth opportunity in secured lending, including FGTS, public payroll, and the newly launched private payroll loans. He also followed up by asking why management does not expect the new private payroll product to have a material short-term negative impact on the existing unsecured loan portfolio.

Answer

CFO Guilherme Marques do Lago highlighted the massive profit pool available in Brazil's secured lending market. He noted strong traction in public payroll loans and market share gains in FGTS, and expressed significant optimism for the digitally-native private payroll product. Lago explained that any potential cannibalization of unsecured loans would be far outweighed by the overall growth of the credit portfolio, as the new product will allow Nu to grant more and better credit to a wider customer base.

Tito Labarta inquired about the growth outlook for the secured lending portfolio, particularly FGTS and payroll loans, and asked how the lower-yield nature of these products impacts overall company profitability and ROE.

Answer

CFO Guilherme Marques do Lago detailed a strong growth outlook for secured lending, driven by achieving 'product parity' in public payroll loans, signing new collateral agreements, and capturing over 30% market share in new FGTS originations. Regarding profitability, Lago explained that while the ROE of secured loans is lower than unsecured products, it is not dilutive to the company's overall ROE. This is because the growth is funded by deploying excess liquidity from the balance sheet (e.g., treasury bonds), not by replacing higher-return assets, thus optimizing the balance sheet and boosting overall profitability.

Tito Labarta with Goldman Sachs inquired about Grupo Cibest's outlook for asset quality and cost of risk guidance, considering persistent high inflation and interest rates, and the potential risks these factors pose throughout 2026 and into the following year. He also asked about the company's capital allocation strategy, including potential for additional share buybacks after the current program, and the future of Banco Agromercantil (BAM) in Guatemala, which has shown underperformance, questioning if more sales are anticipated or if there's a plan for improvement.

Answer

Juan Carlos Mora, Chief Executive Officer, acknowledged the challenges of managing cost of risk in 2026 due to inflation and interest rates, stating the guidance incorporates these risks and expressing confidence in the company's ability to react quickly. Mauricio Botero Wolff, Chief Strategy and Financial Officer, added that scenarios up to 12% interest rates were simulated, risk brackets in consumer lending were closed, and COP 300 billion in provisions were anticipated for minimum wage impact and specific corporate client deterioration. Regarding capital allocation, Mr. Mora reaffirmed commitment to BAM, targeting double-digit ROE by 2027. Mr. Wolff detailed plans to optimize capital through internal AT1 instruments, capitalizing Nequi (COP 600 billion), Wompi, and Wenia (COP 50 billion each), and investing in IT projects. He also confirmed a new three-year buyback program and noted the double leverage ratio of 101% is well below the 120% limit.

Tito Labarta inquired about the outlook for asset quality and cost of risk guidance, considering high inflation and interest rates, and potential risks throughout 2026 or into 2027. He also asked about capital allocation, the possibility of additional share buybacks after the current program, and the performance of Banco Agromercantil (BAM) in Guatemala, including potential sales or strategies to improve its ROE.

Answer

CEO Juan Carlos Mora acknowledged the challenges of inflation and interest rates on cost of risk but expressed confidence in management's ability to adapt, with current guidance incorporating these risks. He affirmed commitment to BAM, citing good potential and a target of double-digit ROE by 2027. CFO Mauricio Botero Wolff added that the new corporate structure provides flexibility for capital optimization, including internal instrument issuance, capitalizing digital ventures like Nequi, Wompi, and Wenia, and ongoing IT investments. He also confirmed a planned three-year buyback program, executed based on market conditions, and noted the current double leverage is well within limits.

Tito Labarta from Goldman Sachs asked for an update on the latest expectations regarding the upcoming Colombian presidential elections and sought clarification on Grupo Bancolombia's efficiency guidance for 2026, particularly how further efficiency gains could be achieved as Net Interest Margin (NIM) normalizes.

Answer

CEO Juan Carlos Mora stated that presidential elections are still far, with more clarity expected in January and March regarding candidates. CFO Mauricio Botero Wolff clarified that the NIM guidance for 2026 (6.3%-6.5%) incorporates potential central bank rate decisions. He also mentioned that while the 2026 efficiency guidance is around 50%, the bank aims for 45% through various optimization projects, acknowledging structural challenges in Colombia.

Tito Labarta inquired about the latest expectations regarding the Colombian presidential elections and the efficiency guidance for next year (around 50%), considering current performance and NIM normalization.

Answer

Juan Carlos Mora (CEO) stated that presidential elections are still distant, with more clarity expected in January and March 2026. Mauricio Botero Wolff (CFO) clarified the 2026 NIM guidance of 6.3%-6.5% and acknowledged that while the 50% efficiency target is not ideal, the bank has various initiatives to optimize expenses despite structural challenges.

Tito Labarta followed up on Yape, asking about expense growth relative to the guided tripling of revenues by 2028, and how Yape's increasing profitability, combined with ongoing digital investments, would impact Credicorp's overall ROE. He then sought to quantify the potential ROE accretion from these initiatives.

Answer

Gianfranco Ferrari, CEO, and Alejandro Pérez-Reyes, CFO, responded. Gianfranco Ferrari confirmed that digital initiatives overall are expected to be ROE-positive starting in 2026, with increasing positive impact in subsequent years. Alejandro Pérez-Reyes added that Yape's revenue per month is growing much faster than its cost per month, expecting Yape's cost-to-income ratio to fall below BCP's (ex-Yape) in the next couple of years. Gianfranco Ferrari confirmed that an ROE accretion of 50-100 basis points per year from these initiatives was a 'good guess'.

Tito Labarta asked about Yape's expense growth relative to its revenue, its impact on ROE, and the net accretion to Credicorp's overall ROE from Yape and other digital initiatives, considering ongoing investments.

Answer

CEO Gianfranco Ferrari reiterated that digital initiatives are expected to become ROE positive starting in 2026, with increasing positive contributions in subsequent years. CFO Alejandro Pérez-Reyes added that Yape's revenue per month is growing significantly faster than its cost per month, projecting Yape's cost-to-income ratio to fall below BCP's (excluding Yape) within the next two years. He confirmed that a 50-100 basis point ROE accretion per year from digital initiatives is a reasonable estimate.

Tito Labarta followed up on guidance, asking if potential upside would come primarily from a lower cost of risk, and questioned what it would take for loan growth to accelerate, as it remains muted despite strong economic conditions.

Answer

Chief Financial Officer Alejandro Perez-Reyes explained that loan recovery typically lags after a downcycle and that high liquidity has led to significant client prepayments. However, he noted that loan sales have been very strong in recent months. An executive, likely CEO Gianfranco Ferrari, added that the company prioritized ensuring risk processes were robust before accelerating loan growth.

Tito Labarta of Goldman Sachs questioned why the efficiency ratio guidance for 2025 is stable to slightly weaker despite Yape's profitability. He also asked for the expected sustainable ROE for the insurance business.

Answer

CFO Alejandro Perez-Reyes explained that significant ongoing investments in innovation and core business capabilities are keeping the efficiency ratio at similar levels. CEO Gianfranco Ferrari added that while Yape is profitable, its cost-to-income ratio is much higher than the group's average, which negatively impacts the consolidated efficiency metric as Yape grows. For the insurance business, Ferrari guided for a sustainable ROE in the low 20s, noting that the exceptional results of the past two years were not sustainable.

Tito Labarta questioned the full-year ROE guidance of around 17%, given the strong year-to-date performance, and inquired about the net interest margin's sensitivity to falling interest rates.

Answer

Chief Financial Officer Alejandro Perez-Reyes confirmed that Q4 seasonality would temper results but expects the full-year ROE to land on the upper side of the ~17% guidance. He quantified NIM sensitivity as a ~15 basis point impact in the first year from a 100 bps rate cut, but expressed confidence in offsetting this through funding advantages and pricing discipline.

Tito Labarta sought clarification on XP's 2026 revenue guidance (BRL 22.8B-BRL 26.8B from Investor Day), noting it implies significant acceleration from 2025's 8% growth, despite net inflows expected to remain around BRL 20 billion. He also asked if the acceleration drivers are back-end loaded in 2026, particularly as interest rates decline, boosting equity and fixed income revenues.

Answer

Thiago Maffra, CEO of XP, confirmed the same guidance, noting that the low end implies 17% revenue growth for 2026, which he believes is achievable. He reiterated the BRL 20 billion net new money expectation for Q1/Q2, acknowledging that future acceleration will be needed for the 2033 leadership ambition. Maffra clarified that the guidance does not rely on market improvements or better take rates, but rather on controllable levers. He also confirmed that XP typically sees seasonality with stronger performance in the second half of the year.

Tito Labarta sought clarification on XP's 2026 gross revenue guidance of BRL 22.8-BRL 26.8 billion, noting it implies a significant acceleration from 2025's 8% growth, despite net inflows remaining around BRL 20 billion. He also asked if this acceleration is expected to be back-end loaded in the second half of 2026, driven by falling interest rates and improved equity/fixed income markets.

Answer

CEO Thiago Maffra confirmed the guidance, stating that reaching the lower end implies 17% revenue growth for 2026, which he believes is achievable through controllable levers, not necessarily market improvement. He acknowledged that while net new money is expected to remain around BRL 20 billion in the near term, it will need to accelerate for XP to achieve its 2033 leadership goal. Maffra also noted that XP typically experiences seasonality, with results accelerating in the second half of the year.

Tito Labarta inquired about the sustainability of corporate revenues, specifically if hedging solutions are driven by tax reform anticipation or have a more long-term basis, and asked if the jump in retail inflows was normal volatility or an acceleration. He also questioned the realism of the 2025 revenue guidance (10% target) and the 2026 guidance (20% jump), given recent macro challenges.

Answer

Victor Mansur explained that hedging solutions are tied to debt issuance, influenced by both tax regulation risk and currently cheap credit spreads, with companies acting ahead of anticipated 2026 volatility. He also noted other revenue lines within the corporate franchise like power trading, cash management, FX, and credit origination. Thiago Maffra attributed the retail inflows to improved service levels from the 'third wave' initiatives (technology, AI), but expects retail net new money to stabilize around BRL 20 billion for the next quarters, with some natural volatility. For revenue guidance, Maffra stated that while H2 2025 is stronger, the soft H1 makes hitting 10% for 2025 challenging, and for 2026, a 17-20% growth is still doable, though potentially slightly short of the initial guidance.

Tito Labarta questioned the sustainability of strong corporate revenues, particularly hedging solutions, beyond potential tax reform anticipation. He also asked for insights into the significant jump in retail inflows to BRL 20 billion, whether it indicates acceleration or normal volatility. In a follow-up, he inquired about the realism of the 2026 revenue guidance (BRL 22.8 billion, 20% jump) given the tougher macro environment.

Answer

CFO Victor Mansur explained that corporate revenues from hedging are tied to issuance, driven by both tax regulation risk and low credit spreads, suggesting companies are front-loading debt issuance. He also highlighted other corporate revenue lines like power trading, cash management, and FX. CEO Thiago Maffra attributed the retail inflows to ongoing improvements in service level and value proposition (the 'third wave'), powered by technology. He views BRL 20 billion as the current stable level, with some quarterly volatility. For 2026 revenue guidance, Maffra acknowledged that while 2025 was soft, a 17-20% growth for 2026 is 'still doable,' though they might be 'a little bit short' of the guidance.

Tito Labarta of Goldman Sachs asked for a breakdown of the expected revenue acceleration in the second half of the year and questioned whether fixed income revenues are peaking or could continue to grow strongly.

Answer

CFO Victor Mansur attributed the expected 2H revenue growth to three factors: more business days, growth in new verticals and advisor headcount, and a potentially stronger DCM market. On fixed income, he noted that while high short-term rates are compressing take rates as clients prefer shorter duration, this trend could reverse as rates fall. He added that a strong primary offering pipeline in the second half could also boost fixed income performance by attracting clients to longer-duration products.

Tito Labarta from Goldman Sachs inquired if recent news concerning midsized banks had negatively impacted XP's client inflows. He also asked for the most critical driver for a potential recovery in the company's equity revenues.

Answer

CEO Thiago Maffra stated there was no impact on inflows or revenue from the midsized bank news, as the bank in question was not a significant contributor. CFO Victor Mansur identified the key drivers for an equity revenue recovery as a combination of higher market trading volumes, improved market performance, and a rebound in primary offerings for listed funds like REITs.

Tito Labarta asked about the drivers for potential upside to the 10%+ revenue growth guidance for 2025 to meet the 2026 targets. He also inquired about the flexibility of the projected 10% expense growth and the potential for further cost-cutting measures.

Answer

CEO Thiago Maffra described the 10%+ revenue guidance as conservative, noting it doesn't rely on a better macro environment. He detailed strong growth drivers across core investments, cross-selling, and the wholesale bank, stating they are on pace to meet the 2026 guidance. CFO Victor Mansur added that expense management is dynamic; they will manage costs to ensure efficiency ratio improvement, investing more if revenues outperform and tightening if they are at the lower end of guidance.

Tito Labarta asked about the growth outlook for the fixed income retail revenue line and the Issuer Services division, particularly regarding DCM activity. He also sought confirmation that the reported BIS ratio was fully loaded.

Answer

CEO Thiago Maffra expressed optimism for both fixed income and Issuer Services revenues, citing a robust DCM pipeline and strong client demand. He noted that the company's restructured bank enhances competitiveness in originating and warehousing deals. He also confirmed the BIS ratio is fully loaded.

Tito Labarta inquired about Inter&Co's fee income growth, noting it didn't grow significantly year-over-year in the quarter despite the Inter Pag consolidation impact being behind. He asked about the spike in fee expenses, expectations for future fee income growth, and when it might align more with loan growth, also mentioning headwinds from Chinese players in Inter Shop.

Answer

Brazil CEO Alexandre Riccio de Oliveira explained that the fee income ratio compressed to 25% from 30% in 2024 due to strong NII expansion (45% growth). He highlighted positives like 15%+ card TPV growth, 27% AuC growth in investments, and 10M+ insurance contracts. Headwinds included Inter Shop pressure from Chinese players, though active clients increased by 3%. He noted that adjusting for one-off capital gains and Central Bank Resolution 4966 would normalize 2025 fee income growth to around 15%. He also mentioned initiatives like hyper-personalization and conversational sales to re-engage clients and boost fee-related product sales. Regarding fee expenses, he stated that costs like Inter Loop are viewed as 'good expenses' for client engagement, activation, and cross-selling, optimizing for net income.

Tito Labarta inquired about Inter&Co's fee income growth, noting it didn't grow significantly year-over-year for the quarter despite Interpag consolidation being behind, and asked about the spike in fee expenses, particularly Inter Loop and services commissions, and the impact of Chinese players on Inter Shop. He sought clarification on when fee income would align with loan growth and if fee expenses could be improved.

Answer

Brazil CEO Alexandre Riccio de Oliveira explained that the fee income ratio compressed to 25% due to strong NII expansion (45% growth), which he considered a 'good problem.' He highlighted positive drivers like cards TPV growth (15%+), strong investments business (27% UC growth), and insurance, while acknowledging Inter Shop faced pressure from Chinese players, though active clients still increased by 3%. He noted that adjusting for one-offs (capital gains) and Resolution 4966 would normalize 2025 fee income growth to around 15%. Regarding fee expenses, he stated that Loop is a key engagement tool, using cashback to incentivize credit sales, and while expenses are monitored, the focus is on optimizing for net income and growth.

Tito Labarta asked for the outlook on asset quality and provisioning levels for the remainder of the year, considering the macroeconomic environment and the company's growth in higher-risk segments like private payroll loans.

Answer

CFO Santiago Horacio Stel explained that the company's strategy is to optimize the risk-adjusted NIM, not just minimize cost of risk. He highlighted that the 90-day NPL is at its lowest level since 2022. Mr. Stel reaffirmed the cost of risk guidance of 5.0% to 5.25%, stating this range already accounts for the current portfolio mix and that he remains comfortable with the overall asset quality outlook.

Tito Labarta inquired about the outlook for expense growth and efficiency improvements in 2025 to reach the long-term 30% target. He also asked about the company's capital management, including the Core Tier 1 ratio in Brazil and the use of excess capital at the holding company.

Answer

Executive Alexandre De Oliveira affirmed the commitment to the 30% efficiency ratio target through disciplined cost initiatives. Executive Santiago Stel noted that Q4 expense growth was driven by higher volumes and variable pay but that costs are under control. Executive João Vitor Nazareth Teixeira de Souza addressed capital, stating the holdco structure optimizes allocation and that the strategy is to increase leverage in the Brazil operation by deploying capital into high-return loans while paying a modest dividend.

Tito Labarta inquired about the stability of the pre-tax ROE, the impact of a lower expected tax rate due to tax benefits, and whether the underlying earnings potential of the business continues to improve, or if the tax rate remains low due to these benefits.

Answer

EVP and CFO Cassiano Scarpelli confirmed that the operational result of the group before taxes grew 27% in 2025 and expects strong operational result growth in 2026. He clarified that the lower tax rate is not due to weaker operational results but rather a well-distributed performance across strong-performing entities like insurance, Bradesco Consórcios, and Bradesco Financiamentos, which have different tax rates. He also noted that fiscal aspects and laws can influence the consolidated tax rate.

Tito Labarta from Goldman Sachs inquired about the underlying earnings potential of the business, specifically whether the pre-tax ROE is expected to continue improving, or if the lower tax rate is primarily driven by tax benefits, and how the ROE (excluding the tax rate) is projected to evolve.

Answer

CFO Cassiano Scarpelli confirmed strong operational result growth (27% in 2025) and anticipated continued strong growth in 2026. He clarified that the lower consolidated tax rate is due to a mix of tax rates across the diversified group (e.g., insurance, payments, affiliates) and specific fiscal benefits, not weaker operational performance, indicating that the underlying earnings potential is robust and well-distributed.

Tito Labarta of Goldman Sachs asked about Bradesco's capital management strategy, questioning if the bank intends to increase its Core Tier 1 (CET1) ratio from the current 11.1% as profitability improves.

Answer

IRO Andre Garvalho stated that the bank considers the current 11.1% CET1 level to be very adequate and expects it to remain stable through the end of the year. He explained that profit generation will organically fund IOC payments and portfolio growth without restricting capital. The bank's plan includes absorbing its stock of DTAs over time without negatively impacting the capital base.

Asked about the bank's capital strategy, specifically whether there are plans to increase the Core Tier 1 ratio from its current 11.1% and what a sustainable level would be.

Answer

The bank considers the current Core Tier 1 level of 11.1% to be adequate and expects it to remain stable through year-end. This level provides a sufficient buffer for growth opportunities. Profit generation is expected to organically fund dividends and portfolio growth while maintaining this ratio. There is no plan to increase it at this time.

Tito Labarta asked about the financial contribution from the recently acquired John Deere Bank, specifically if it had any impact on Q1 earnings and what the expectations are for the full year.

Answer

An executive clarified that the contribution from John Deere to the Q1 net income was 'immaterial' and close to zero. The acquisition is viewed as a long-term strategic move to strengthen Bradesco's position in the resilient agribusiness sector. The current focus is on operational integration and strategy rather than immediate financial contribution.

Tito Labarta questioned the sustainability of the strong fee income growth and asked for clarification on the significant increase in 'other' operating expenses while core expenses remained controlled.

Answer

Executive Marcelo de Noronha asserted that the growth in fee income is sustainable and recurring, with the exception of the naturally volatile capital markets line. CFO Cassiano Scarpelli explained that the jump in 'other expenses' was primarily due to a difficult comparison baseline from the prior year, which included one-off gains and reversals. He noted that excluding certain consolidated companies, expense growth was within guidance.

Tito Labarta of Goldman Sachs questioned the sustainability of the quarter's healthy fee income growth, particularly from loans, asset management, and capital markets. He also asked for clarification on the significant increase in the 'other' operating expenses line item.

Answer

Executive Marcelo de Noronha asserted that the growth in fee income is sustainable and recurring, with the exception of capital markets which is naturally more volatile. CFO/CTO Cassiano Scarpelli explained that the jump in 'other' expenses was due to a difficult year-over-year comparison, as the prior year's baseline included specific reversals and gains. He stressed that core expense control remains a focus.

Tito Labarta from Goldman Sachs asked Milton Maluhy Filho about Itaú Unibanco's concerns regarding the evolving competitive environment in Brazil, including incumbent banks adapting and fintechs gaining strength, particularly in high-income segments. He also sought insights into where management sees opportunities and risks for sustaining strong results.

Answer

Milton Maluhy Filho, CEO of Itaú Unibanco, expressed immense respect for all competitors and acknowledged the fierce competition across various segments. He attributed Itaú's competitive advantage to its human capital, strong culture, disciplined capital allocation, long-term investment perspective, and modernization of platforms with AI integration. He mentioned ongoing strategic revisions in individual and SME operations. While 'everything' worries him (competition, macro, service levels), he emphasized the bank's capability to react quickly to market changes, supported by a strong balance sheet, no capital or liquidity restrictions, and a robust risk management culture.

Tito Labarta from The Goldman Sachs Group, Inc. asked Milton Maluhy Filho about Itaú Unibanco's perspective on the evolving competitive landscape in Brazil, including challenges from incumbent peers and fintechs, specific segments of concern, and where the bank sees opportunities to sustain its strong profitability and results.

Answer

Milton Maluhy Filho, CEO of Itaú Unibanco, expressed immense respect for all competitors and acknowledged the fierce competition across various business segments. He attributed Itaú's ability to adapt and compete effectively to its strong human capital, culture, disciplined capital allocation, long-term investment perspective, and modernization of technology platforms, data architecture, and AI integration. Maluhy Filho stated that while he is 'paranoid' about competition and macro factors, the bank's capabilities in execution and risk management position it well to continue delivering strong results and seize opportunities.

Tito Labarta from Goldman Sachs asked about the bank's sustainable long-term profitability (ROE), considering its excess capital, potential for efficiency gains, and the changing competitive landscape, especially in the high-income segment.

Answer

CFO & Member of Executive Committee Gabriel Amado de Moura stated that while the bank doesn't guide long-term ROE, he sees no reason why the current high levels of profitability are not sustainable, given the information available today. He acknowledged that competition is tough but expressed confidence in Itaú's capabilities, teams, and investments to maintain its strong position and continue delivering value above its cost of equity.

Tito Labarta from Goldman Sachs inquired about capital management, asking about the appropriate level of capital and the potential for further capital returns in 2025, given the high ROE and CET1 ratio.

Answer

CEO Milton Maluhy Filho clarified that 'additional dividends' are becoming a new normal, not an extraordinary event. He stated the bank targets a 12% CET1 ratio, maintaining a buffer for uncertainty. While business growth is the priority, any excess capital generated will be distributed annually to shareholders through dividends and/or buybacks.

Tito Labarta inquired about the strong loan growth in the corporate sector, including large corporates and SMEs, and how the bank views its ability to sustain this pace given the broader macroeconomic concerns in Brazil.

Answer

CEO Milton Maluhy Filho explained that the growth is healthy, supported by a well-capitalized balance sheet and an active DCM market that allows for a revolving credit strategy. He noted the portfolio is highly diversified with low concentration risk. While the rapid growth pace in large corporates might moderate, he expressed comfort with the portfolio's quality and the ongoing opportunities in both large companies and SMEs, where delinquency is decreasing.

Tito Labarta requested quantification of the additional expenses related to early retirement plans and inquired about the expected reversal and magnitude of improvement in market-related income from the bond portfolio in Q4 2025.

Answer

CFO Jorge Scarinci stated that approximately 18.5% of the ARS 23.5 billion in employee benefits in Q3 2025 were non-recurrent due to early retirement plans, though Q4 recurrence is uncertain. He expects a reversal and much better performance from the bond portfolio in Q4 2025, given that 23-25% of it is market-related.

Tito Labarta requested quantification of the additional expenses related to early retirement plans to assess their impact on Q4. He also asked if the negative impact on market-related income from the bond portfolio in Q3 was expected to reverse and improve in Q4.

Answer

CFO Jorge Scarinci stated that approximately 18.5% of the ARS 23.5 billion in Q3 expenses were non-recurrent, but it's too early to confirm if similar expenses would appear in Q4. He confirmed expectations for a much better performance in the bond portfolio in Q4, reversing the Q3 decline.

Tito Labarta asked about the asset quality evolution and NPL peak for NaranjaX, similar to the bank, and its ability to resume growth. He also inquired about the bank's margins (NIMS), specifically if the third quarter marked the bottom, and the expected recovery timeline for Q4 and into 2026. A follow-up question addressed whether recent reductions in reserve requirements were sufficient or if further reductions were needed, and their impact on liquidity.

Answer

Gonzalo Fernández Covaro (CFO, Grupo Financiero Galicia) indicated NaranjaX's NPLs are expected to peak around March/April next year, similar to the bank, with faster portfolio cure due to shorter loan durations. He expects NaranjaX's NPLs to improve for the rest of 2026. For margins, October marked the bottom, with November showing fast recovery and December expected to be at Q2 levels. Margins are anticipated to remain healthy in 2026, with a slight reduction in the second half due to continued rate reductions. Regarding reserve requirements, recent central bank changes (daily calculation, 3.5% reduction in zero-interest cash encashments starting December 1) are currently sufficient but may be revisited next year.

Tito Labarta asked about the NPL peak and growth resumption for NaranjaX, as well as the short-term and 2026 evolution of net interest margins (NIMS), and the need for further reserve requirement reductions.

Answer

Gonzalo Fernández Covaro (CFO, Grupo Financiero Galicia) indicated NaranjaX's NPLs are expected to peak around March/April next year, with faster portfolio recovery due to shorter loan durations. He stated that NIMS bottomed in October, with November showing quick improvement and December returning to Q2 levels, expecting healthy margins in 2026 with slight reductions in the second half due to rate cuts. He also noted recent central bank changes to liquidity requirements were positive but further revisions might be needed next year.

Tito Labarta inquired about updates on daily reserve requirements, potential government reductions, and their impact on Net Interest Margin (NIM) for Q4 2025 and 2026. He also asked about the outlook for asset quality, specifically the rising retail NPLs, and how this might affect the retail loan book's growth.

Answer

Diego Cesarini, Head of Asset and Liability Management and Investor Relations, explained that the Central Bank reduced daily compliance to 75% of total requirements from December 1st, reducing inefficiency, and also reduced requirements on sight deposits, directly impacting profitability. He expects further relaxation of monetary policy. Carmen Morillo Arroyo, CFO, noted that NPLs were 3.28% in September (below system average), anticipating a slightly higher but not dramatic Q4 2025, with 2026 expected to be much better. Diego Cesarini added that NIMs, stable throughout the year except for Q3's rate volatility, are expected to be higher in Q4 2025 and not fall significantly in 2026 due to loan demand and liquidity.

Tito Labarta asked for an update on daily reserve requirements, potential government reductions, and their impact on liquidity, growth, and Net Interest Margin (NIM) for Q4 2025 and 2026. He also questioned the outlook for asset quality, particularly rising retail NPLs, the expected duration of the credit cycle, and the bank's ability to grow its retail loan book.

Answer

Head of ALM and Investor Relations Diego Cesarini explained that the Central Bank has already eased daily reserve compliance to 75% and reduced requirements on sight deposits, improving profitability and liquidity. He expects further relaxation of monetary policy, leading to higher NIMs in Q4 2025 and stable NIMs in 2026 due to strong loan demand and pricing power. CFO Carmen Morillo Arroyo noted that retail NPLs, at 3.28% in September, are below the system average, anticipating a challenging Q4 but a better 2026 for asset quality, with cost of risk decreasing after year-end 2025.

Tito Labarta asked about the bank's funding and deposit base, noting a 12% fall in deposits this quarter, flattish time deposits, declining savings, and reliance on LCAs, LCIs, and financial bills. He inquired about the factors impacting deposit growth and the future evolution of funding costs. He also asked for any comments on Santander Spain's view on maintaining the publicly traded stub piece in Brazil and the potential for a buyout.

Answer

CEO Mario Leão stated that the bank is intentionally evolving its liabilities mix, prioritizing quality over volume. He highlighted a disciplined strategy over the past two years to shift from wholesale-dependent funding to retail-based, increasing transactional deposits from individuals and SMEs. He noted that financial letters were tactical issuances at tight spreads to reduce wholesale costs. CFO Gustavo Alejo added that the plan is to lower the overall cost of funding by changing the mix, focusing on quality, and leveraging good liquidity levels. He mentioned reducing the loan portfolio in the mass market while increasing transactional deposits. Regarding a potential buyout, CEO Mario Leão stated that the group already owns close to 90% and the focus is on delivering strong performance to justify that ownership, aligning with minority shareholders. He could not comment on group-level discussions.

Tito Labarta asked about the 12% fall in deposits this quarter, the flat time deposits over the last year, and declining savings deposits, with funding shifting to LCAs, LCIs, and financial bills. He sought to understand the impact on deposit growth, future evolution, and funding costs. His second question was about the possibility of Santander Spain buying out the remaining stake in Santander Brasil and the holding company's view on maintaining a publicly traded stub.

Answer

CEO Mario Leão explained that the bank is intentionally evolving its liabilities mix, prioritizing the quality of deposits over sheer volume, shifting from wholesale-dependent to retail-driven funding. He noted that retail deposits, especially transactional ones (DDA, ContaMax), are increasingly funding loan growth, leading to a positive evolution of overall liability costs. CFO Gustavo Alejo added that this strategic shift aims to lower the overall cost of funding and improve the balance sheet composition, contributing to stable and higher ROE. Regarding the buyout, Leão stated that the group already owns nearly 90% of Santander Brasil, and the focus is on increasing the value of this stake through improved performance and dividends. He acknowledged that the group might debate a buyout but emphasized that the Brazil team's role is to deliver the best possible Santander Brasil.

Asked about the bank's profitability, inquiring about a sustainable level of ROE and its key drivers. He also asked whether the sharp decline in ROE in recent years was purely cyclical or if structural competitive changes in the industry were also a major factor.

Answer

The executive stated the goal is to return to a high-teens ROE, driven by profitable growth and, crucially, by making the low-income segment profitable. He attributed the past ROE decline to a combination of factors: increased competition, the entire industry accelerating credit in 2021, and a structural change in the profitability model for the low-income market. The bank's current strategies are designed to counteract these competitive and regulatory shifts.

Tito Labarta from Goldman Sachs inquired about the key drivers for the upgraded financial guidance, the sustainability of the 50%+ TPV growth rate, and whether this growth was broad-based or concentrated among a few key merchants.

Answer

CEO Pedro Arnt explained that the stronger outlook is due to broad-based momentum, including a rebound in Brazil and Mexico and strong performance across other emerging markets. He attributed this to an accelerated push by global merchants to localize payments. Arnt clarified that while the growth is led by larger global players, it is driven by the top 20 merchants, indicating healthy diversification beyond just one or two clients.

Tito Labarta asked for details on the sustainability of growth and take rates in Argentina, particularly concerning advancement volumes, and for more color on the partial volume loss with a large merchant in Mexico.

Answer

CEO Pedro Arnt explained that growth in Argentina is sustainable due to renewed merchant interest and that the higher take rate is a structural part of a white-label product involving receivable financing. Regarding Mexico, he stated the volume shift was due to concentration with a few large merchants, not churn, and that the company needs to improve execution to reignite growth.

Tito Labarta asked about StoneCo's confidence in its 2027 guidance given the current TPV growth slowdown, and inquired about the expected timing and use of proceeds from the Linx divestiture.

Answer

Strategy & Marketing Officer Lia Machado de Matos acknowledged that softer market growth creates risk for the 2027 TPV target but expressed confidence in overall guidance due to strong monetization in banking and credit. CFO & IRO Mateus Scherer Schwening stated the Linx deal timing depends on regulatory approval and that proceeds will be returned to shareholders if no immediate value-accretive opportunities are identified.

Tito Labarta followed up on the EPS guidance, asking if executing the remaining share buyback program would create upside to the forecast. He also sought clarity on the potential sale of the software business, asking if a deal is still possible or effectively off the table.

Answer

Executive Mateus Schwening confirmed the EPS guidance does not factor in future buybacks, so any repurchases under the remaining BRL 900 million authorization would represent potential upside. On the software assets, CEO Pedro Zinner stated that no offers met their intrinsic value assessment and the focus is now on maximizing the asset's value on a standalone basis. He did not definitively close the door on a future sale but emphasized the current strategy is execution-focused.

Tito Labarta of Goldman Sachs asked about the potential for loan growth to accelerate in 2026 post-elections and the sustainability of high single-digit fee growth, considering the possibility of new interchange fee regulations.

Answer

Andrés Sansone, Chief Economist, and Patricia Pérez, CFO, addressed the questions. Sansone noted that while the expanding customer base supports fee growth, potential new interchange fee regulations by year-end could impact 2026. Pérez added that while consumer and SME loan demand is healthy, significant acceleration in overall loan growth depends on the reactivation of investment from large corporates, which is tied to the political landscape.

Tito Labarta from Goldman Sachs asked about the outlook for loan growth acceleration in 2026 following the elections and the sustainability of fee income growth, considering potential new regulations.

Answer

Andrés Sansone, Chief Economist, addressed fees, noting that while customer base expansion is a positive driver, a potential interchange fee cap at year-end could impact 2026. Patricia Pérez, CFO, added that consumer and SME loan demand is healthy, but large corporate loan growth is uncertain and depends on the post-election political landscape.

Tito Labarta of Goldman Sachs inquired about the key drivers that would enable Banco Santander Chile to bridge the gap from its 2024 ROE guidance of 15-17% to its long-term target of 17-19%.

Answer

Emiliano Muratore, CFO, explained that the two primary drivers for achieving the long-term ROE target are a normalization in the cost of risk from current cyclical highs and continued Net Interest Margin (NIM) expansion. This NIM improvement will be supported by the full repayment of the FCIC facility and the normalization of monetary policy conditions.

Tito Labarta from Goldman Sachs sought clarification on the increased fundraising guidance, asking if it was purely organic and separate from the recent REIT acquisition, and questioned the timing of its impact on Fee Related Earnings (FRE) for the remainder of the year.

Answer

CEO Alexandre Saigh confirmed the 5-10% increase to the fundraising target is entirely organic and in addition to the ~$600 million REIT acquisition. He attributed the strong fundraising to heightened interest from Asian, Middle Eastern, and European investors in Patria's infrastructure, credit, and GPMS products, driven by a search for alternatives to U.S. markets. Saigh explained that the FRE impact would be more weighted towards Q4 and into 2026, as the newly raised capital needs to be deployed before it becomes fee-earning, but expressed high confidence in meeting the full-year FRE guidance.

Tito Labarta asked about the fundraising outlook, questioning if there was potential upside to the $6 billion annual target given the strong Q1 results. He also asked for clarity on the path to achieving the full-year fee-related earnings (FRE) guidance, noting the Q1 run-rate appeared low.

Answer

CEO Alexandre Saigh confirmed Patria is maintaining its $6 billion fundraising target for the year, cautioning against extrapolating the record Q1 performance. To address the FRE guidance, Saigh provided a mathematical bridge, explaining that the Q1 run-rate of $42.6 million, when annualized and combined with expected incentive fees and management fees from the new capital raised, positions the company to achieve the midpoint of its $200-$225 million guidance.

Tito Labarta asked whether the increased investor interest in Latin America is translating into actual capital deployment and which segments are most attractive. He also questioned why the FRE margin was below guidance and how it is expected to evolve.

Answer

CEO Alessandro Morgado Horta confirmed that interest is real and translating into commitments, with equities, infrastructure, and credit being the most sought-after asset classes by global investors. Bruno Zaremba, President of Finance and Operations, addressed the FRE margin, attributing the Q1 dip to an unusually quiet quarter for corporate advisory revenue. He reaffirmed the full-year guidance for a margin in the low 30s, expecting a stronger second half as the advisory pipeline materializes.

Tito Labarta sought to distinguish between one-time and recurring advisory fees, particularly within the IP&S segment. He also asked if the management fee rate for IP&S is at a sustainable level, considering Compass was only included for two months.

Answer

CEO Alessandro Morgado Horta and President of Finance and Operations Bruno Sacchi Zaremba clarified that advisory revenues from IP&S are a recurring part of the business, though lumpy, as they depend on the timing of closed-end fund placements. They distinguished these from truly non-recurring M&A-related expenses. Horta also confirmed that the current fee rate for IP&S, once annualized, should represent a stable recurring level.

Followed up on TPV, asking if take rate pressure is purely from the mix shift to larger merchants and about competitive dynamics. Also inquired about the source of the strong deposit growth, specifically the contribution from large merchants versus SMBs.

Answer

The company clarified that take rate pressure is indeed from the mix shift to LMEC, a trend expected to continue, but noted their definition of 'large merchant' is relatively small (over BRL 1M/month). This growth is driven by their own initiatives, not competitor actions. The strong deposit growth is primarily driven by SMBs and consumers, as very large merchants typically have established banking relationships elsewhere.

Questioned the reasons behind the sharp quarterly decline in financial expenses, especially for time deposits, and whether this trend is sustainable as interest rates in Brazil decrease.

Answer

The decline in funding expenses is expected to continue as interest rates fall, since approximately 80% of the bank's funding is at floating rates. A key driver was a regulatory change that extended the lockup period for certain investments (LCA/LCI), prompting the bank to strategically move clients to time deposits and other funds, which helped reduce overall funding costs.

Inquired about the growth outlook for retail loans, particularly credit cards and consumer finance, given the recent improvement in asset quality. Also asked about the competitive landscape, especially from digital banks.

Answer

The bank's growth focus for individuals is on payroll deductible loans, aiming for low double-digit growth. They are cautious with credit cards due to regulatory uncertainty and competition. For payroll loans, despite increased competition from digital players, they are confident in their ability to defend their leading market share through customized pricing and competitive offers.