Yuri Fernandes

Yuri Fernandes asked for guidance on how to better model and understand the volatile trading gains/mark-to-market on securities. He also questioned the 6% real deposit growth expectation for 2026, which seemed low compared to industry expectations, and how the bank plans to grow loans with such a low deposit growth potential, including any changes in reserve requirements.

Answer

Jorge Scarinci (CFO) explained that the 6% real deposit growth expectation is based on macroeconomic variables and slightly positive real interest rates. He noted that the bank's securities portfolio could be used to finance any gap between loan and deposit growth. For modeling trading gains, he suggested focusing on expectations for domestic prices, inflation, or wholesale rates, as 68% of bonds are inflation-tied and 32% are variable-rate.

Yuri Fernandes sought clarification on modeling the volatile mark-to-market on securities and understanding the drivers of trading gains in Q4 2025. He also questioned the low 6% real deposit growth forecast for 2026, asking how Banco Macro plans to grow loans with such limited deposit growth and if changes in reserve requirements are anticipated.

Answer

Jorge Scarinci, CFO of Banco Macro, explained that the 6% real deposit growth forecast for 2026 is based on fine-tuned macroeconomic variables and slightly positive real interest rates. He clarified that the bank's substantial securities portfolio can be utilized to finance any gap if loan growth (forecasted at 20% real) outpaces deposit growth. Regarding security gains, Mr. Scarinci noted that 68% of bonds are inflation-linked and 32% are variable-rate, suggesting that modeling should align with expectations for domestic prices or wholesale rates, with volatility impacting quarterly payoffs.

Yuri Fernandes of JPMorgan Chase & Co. asked about Banco Macro's funding strategy, given the loan-to-deposit ratio is approaching 100%, and whether loan growth might decelerate. He also sought clarification on potential changes to reserve requirements and requested a quantification of the expected Net Interest Margin (NIM) pressure in Q3.

Answer

CFO Jorge Francisco Scarinci explained that the funding strategy relies on their strong retail deposit base to manage costs, growing both peso and dollar deposits, and utilizing their securities portfolio to fuel lending. He maintained the 2025 guidance for 60% loan growth and 30% deposit growth. Regarding NIMs, Scarinci estimated a potential compression of around 100 basis points in the third quarter due to the volatile environment and rising time deposit costs. He noted that predicting government changes to reserve requirements is difficult.

Yuri Fernandes asked about the drivers behind the lower accounting tax rate in Q4, specifically if it was related to Deferred Tax Assets (DTA) or other factors, and what to expect for Nu's future tax rate.

Answer

Guilherme Lago, Chief Financial Officer of Nu Holdings, attributed the lower effective tax rate in Q4 to two main factors: a non-recurring remeasurement of deferred tax assets (DTA) resulting in a $58 million positive impact, following a federal government approval to increase corporate income tax for fintechs starting in 2026. The second factor was recurring benefits from technology investment tax breaks, which offset increased OPEX from technology investments. Lago also clarified that there were three one-off items in the quarter: the positive DTA reassessment, a negative $25 million Prosofipo expense, and a negative $22 million return-to-office provision.

Yuri Fernandes inquired about the drivers behind the lower accounting tax rate in Q4 2025, specifically asking if it was due to DTA remeasurement or tax-exempt bonds, and what to expect for Nu's tax rate going forward.

Answer

Guilherme Lago, Chief Financial Officer, explained that the lower effective tax rate in Q4 was largely due to two factors: a non-recurring $58 million positive impact from the remeasurement of deferred tax assets (DTA) following a corporate income tax rate increase in Brazil, and a recurring benefit from technology investment tax breaks. He clarified that while the tax rate increase is a medium-term headwind, the DTA remeasurement in the quarter of legislation passage positively impacted the effective tax rate. Lago also noted that increased technology investments across the firm lead to tax efficiencies.

Yuri Fernandes from JPMorgan Chase & Co. asked for clarification on asset quality, specifically the rise in stage three loan formation, and whether this was purely seasonal or a sign of underlying credit deterioration.

Answer

CFO Guilherme Lago confirmed the increase in NPL and stage three formation was almost entirely explained by normal seasonality following Q1's delinquency spike. He reassured that all asset quality figures are performing as expected and highlighted Nubank's conservative underwriting pillars, which include assuming a worsening credit cycle and stress-testing new loan cohorts to withstand a 2x increase in losses.

Yuri Fernandes of JPMorgan Chase & Co. asked for an explanation of the increased coverage ratio for stage 2 loans, questioning if it indicated higher risk or simply conservatism. He also asked for a clarification on whether the $47 million DTA recognition was on a pre- or post-tax basis.

Answer

President and COO Youssef Lahrech explained that the change in stage 2 coverage was due to a Q1 recalibration of the provisioning model's triggers, not necessarily an increase in underlying risk. This adjustment updated the criteria for loans entering stage 2, which he described as a pull-forward of classifications. CFO Guilherme Marques do Lago confirmed that the DTA recognition was on a post-tax basis.

Yuri Fernandes requested more details on the strategy behind the rapid growth in unsecured personal loans, asking about the drivers (e.g., duration, customer type) and why the risk approach seems different from the more cautious stance on Pix financing.

Answer

Chief Product Officer Jagpreet Duggal explained that the strong growth in unsecured loans is driven by several factors: an increasing mix of loans to repeat customers with proven track records, improved credit models allowing for better terms (larger loans or lower rates) at given risk levels, and expansion into new segments like high-income and small businesses. He clarified that risk is assessed granularly for each product, and the lending portfolio's credit quality has been strengthening. On duration, he noted they are working to incrementally increase it over time, but not dramatically.

Yuri Fernandes highlighted the low effective tax rate for the quarter, asking for an explanation of the 'other tax shield' and whether this lower rate is sustainable or if it will revert to the 33-35% range.

Answer

CFO Guilherme Marques do Lago explained two key items. First, a one-time, non-recurring charge of $48 million related to repositioning the Nucoin program impacted G&A. Second, the low tax rate was a seasonal, not non-recurring, event due to the concentration of filings for 'Lei do Bem,' an R&D tax incentive in Brazil. He confirmed this seasonality was also present in Q3 2023 and should be expected to recur in future years.

Yuri Fernandes asked about the tax outlook for 2026, specifically regarding the emergency tax, the effective tax rate assumed in the guidance, and the potential impact of new equity taxes. He also sought clarification on the equity base used for the 2026 ROE guidance (18-18.5%), particularly if it accounts for the Banistmo impairment and excludes minority interests, to help estimate net income.

Answer

CEO Juan Carlos Mora explained the uncertainty surrounding tax regulations, noting a suspended decree and a pending proposal for equity taxes, stating the guidance uses an effective tax rate of 28% (later clarified by CFO Mauricio Botero Wolff as 29-30% for regular operations, with extra provisions for the initial decree). CFO Mauricio Botero Wolff confirmed that the 18-18.5% ROE guidance includes extra tax provisions from the initial decree but not the new equity decree, and it's unlikely both will be accepted. He also confirmed the equity used for the guidance is after the Banistmo impairment, and an 18% ROE corresponds to COP 7.3 trillion in net income, excluding Banistmo's equity and net income.

Yuri Fernandes from JPMorgan Chase & Co. asked about Grupo Cibest's tax outlook for 2026, specifically addressing the COP 150 billion tax headwind in Q4 2025, the continuation of emergency taxes, and the effective tax rate assumed in the guidance. He also sought clarification on the equity base used for the 18-18.5% ROE guidance, particularly if it accounts for the lower equity post-impairment and excluding minority interests, to help estimate net income.

Answer

Juan Carlos Mora, Chief Executive Officer, explained the high uncertainty surrounding tax regulations in Colombia, noting the suspension of some decrees and the ongoing proposal for new equity taxes. He stated the guidance currently assumes an effective tax rate of 28%, subject to updates. Mauricio Botero Wolff, Chief Strategy and Financial Officer, clarified that the 18-18.5% ROE guidance already incorporates extra tax provisions from a decree that, if confirmed, would lead to an approximate 35% tax rate, but does not include the newer equity tax proposal. He confirmed the equity used for guidance is after the impairment and excludes Banistmo's equity and net income, with an 18% ROE corresponding to COP 7.3 trillion in net income.

Yuri Fernandes of JPMorgan Chase & Co. inquired about Grupo Bancolombia's commitment to its share buyback program given recent share price rebound, comparing buybacks to dividends, and the potential use of its shares as a vehicle for M&A. He also asked for insights into Nequi's profitability roadmap following its breakeven, its potential contribution to the group, and the interplay between Nequi and Wompi.

Answer

CEO Juan Carlos Mora expressed satisfaction with the buyback program's evolution and reiterated the flexibility of the new corporate structure for growth, including M&A. He highlighted Nequi's strong performance, particularly its growing loan book and active users, confirming its September breakeven and anticipated profitability in 2026, especially with its planned separation from Bancolombia next year. He also noted Nequi's leadership in the Brevi system and positive net flows. CFO Mauricio Botero Wolff clarified that the COP 1.35 trillion buyback is a cap, not a commitment, with execution managed by third parties based on market conditions.

Yuri Fernandes asked about Grupo Cibest's commitment to the remaining share buyback program given recent share rebound, the potential use of shares as an M&A vehicle, and Nequi's profitability roadmap, including its group contribution, ROE, and interaction with Bre-B.

Answer

Juan Carlos Mora (CEO) expressed satisfaction with the buyback program and reiterated the new structure's flexibility for growth, including M&A. He highlighted Nequi's strong performance, confirming profitability in September and confidence for 2026, noting its leadership in Bre-B transactions. Mauricio Botero Wolff (CFO) clarified that the COP 1.35 trillion buyback approval is a cap, not a firm commitment, with execution dependent on market conditions.

Yuri Fernandes sought clarification on the differing Return on Equity (ROE) figures for the Bancolombia standalone unit (16.5% vs. 25%) and asked for an update on the breakeven timeline for the digital bank, Neki, questioning if it could be achieved sooner than the previously guided 2026.

Answer

CEO Juan Carlos Mora Uribe and VP of Strategy & Finance Mauricio Botero Wolff responded. Mr. Mora expressed optimism that Neki could reach breakeven by the end of 2025 or Q1 2026 at the latest, driven by strong loan growth and user activity. Mr. Botero Wolff clarified that the higher pro forma ROE in the mid-20s is the correct figure to consider for the Colombian operation post-restructuring, as it reflects the more efficient capital base, and that this pro forma view will be used until a full 12-month history is established.

Yuri Fernandes from JPMorgan sought clarification on the differing ROE figures for the Bancolombia standalone unit (16.5% vs. 25% pro forma) and asked about the timeline for the digital bank Neki to achieve breakeven.

Answer

President & CEO Juan Carlos Mora Uribe expressed strong optimism for Neki, citing robust growth in users, deposits, and loans, and suggested breakeven could be reached by year-end 2025 or Q1 2026. VP of Strategy & Finance Mauricio Botero Wolff clarified that the pro forma ROE in the mid-20s is the correct forward-looking figure for the standalone bank post-restructuring. He also noted the bank uses a stringent net income measure for Neki's breakeven, which includes cost of risk.

Yuri Fernandes from JPMorgan Chase & Co. sought clarification on the Return on Equity (ROE) for the Bancolombia standalone unit, noting a discrepancy between figures in the presentation and press release. He also asked about the timeline for NEKI's breakeven, questioning if it could be achieved earlier than the previously guided 2026.

Answer

CEO Juan Carlos Mora Uribe expressed strong optimism for NEKI, stating that based on current positive trends in user activity, deposits, and loan performance, breakeven could be reached by the end of 2025 or Q1 2026 at the latest. VP of Strategy & Finance, Mauricio Botero Wolff, clarified the ROE figures, explaining that the pro forma ROE in the mid-20s is the correct forward-looking metric as it reflects the new, lower equity base post-restructuring. He also noted their breakeven calculation for NEKI is a stringent net income measure.

Yuri Fernandes questioned how the company plans to achieve higher single-digit loan growth while managing funding costs, specifically if delivering funding growth would necessitate higher funding costs in 2026. He also sought clarification on why the 2026 ROE guidance was 17% despite a 19% adjusted ROE in the current quarter.

Answer

Luis Felipe Castellanos, CEO of Intercorp Financial Services, explained that the 17% ROE guidance reflects a conservative outlook for a smooth recovery, especially for the bank's consumer and higher-yielding loan book, considering the electoral year. Carlos Tori, CEO of Interbank, emphasized the focus on growing low-cost deposits through retail banking and the payment ecosystem (Plin, Izipay) to maintain a favorable cost of funding, rather than increasing overall deposit size.

Yuri Fernandes asked about the expected deposit growth necessary to support higher single-digit loan growth and the potential implications for funding costs in 2026. He also followed up on the ROE discussion, questioning why the 2026 guidance was 17% despite a 19% adjusted ROE in the last quarter.

Answer

Luis Felipe Castellanos (CEO, Intercorp Financial Services) explained that the 17% ROE guidance is conservative, influenced by the electoral year and pension fund withdrawals, which can curtail growth. He noted that the bank's ROE recovery, driven by higher-yielding loans, is key to reaching the midterm target. He emphasized the focus on low-cost deposits through retail banking and the Izipay strategy. Carlos Tori (CEO, Interbank) added that the loan-to-deposit ratio is low, and the strategy is to grow low-cost funding from retail and the payments ecosystem (Plin, Izipay) to improve the funding mix and NIM.

Yuri Fernandes of JPMorgan Chase & Co. questioned the 2025 ROE guidance of 16%, noting it seemed conservative compared to the 18% achieved in Q4 2024. He asked for the path to a higher ROE, subsidiary-level ROE guidance, and the competitive outlook for loan growth.

Answer

Executive Luis Castellanos López-Torres explained the guidance by citing Q4's seasonality, strong one-off investment results at Inteligo, and a cautious approach to rebuilding the consumer book. He clarified that subsidiary ROE targets are medium-term goals. Executive Carlos Tori Grande added that Interbank aims to grow slightly above the market, thereby gaining market share, particularly in the consumer segment.

Yuri Fernandes asked about the credit card portfolio, questioning what economic or internal factors are needed for the company to increase its growth appetite in this segment. He also sought to confirm if the credit card product is accretive to the overall risk-adjusted margin and if NIM would continue expanding in 2025.

Answer

Executive Carlos Tori Grande stated that while the credit card market has been shrinking, IFS is near an inflection point and will pursue cautious, consistent growth. CEO Luis Castellanos López-Torres added that a sustained economic recovery is necessary before becoming less conservative. Executive Michela Ramat confirmed that the credit card portfolio is accretive to margins and its recovery is vital for improving yields. She also affirmed that NIM is expected to continue expanding into 2025, noting a further improvement was already seen in October.

Yuri Fernandes asked about Inter&Co's provisioning strategy, specifically regarding bad loan formation (Stage Three, NPL), the usage of coverage this quarter, and how it impacted EBT. He sought details on Stage Three formation trends by product (personal loans, real estate, credit cards) and the outlook for cost of risk and coverage, noting a perceived lower provisioning versus formation this quarter.

Answer

CFO Santiago Horacio Stel confirmed that asset quality is performing as planned. He explained that private payroll's initial cohorts are maturing and passing the 90-day mark, increasing NPLs and Stage Three formation, but their monetization compensates for this delinquency. Credit card performance was good in Q4 due to seasonal liquidity. For mortgages and home equity, Stage Three balances increased by BRL 140 million due to a conservative, integrated view where performing mortgage loans are migrated to Stage Three if the client has 90+ days overdue on other credit lines, a one-time catch-up. Without this adjustment, Stage Three formation would have been flat. For 2026, the cost of risk is expected to be 5.5%-6%, aiming to maximize risk-adjusted NIM rather than minimize delinquency.

Yuri Fernandes asked about Inter&Co's provisioning strategy, particularly regarding bad loans formation (Stage 3, NPL) and coverage usage, noting a potential usage of coverage this quarter. He sought clarification on Stage 3 formation trends for personal loans and real estate, the cost of risk outlook, and coverage expectations, especially given less provisioning versus formation this quarter.

Answer

CFO Santiago Horacio Stel affirmed that asset quality is performing as planned. He explained that private payroll's initial cohorts are maturing, causing an expected increase in NPL and Stage 3 formation, which is compensated by strong monetization. Credit card performance was good in Q4 due to seasonal liquidity. For mortgages and home equity, a BRL 140 million increase in Stage 3 balances was a one-time 'catch-up' adjustment to align with best practices, migrating performing mortgage loans to Stage 3 if the client had 90+ days overdue in other credit lines. Without this adjustment, Stage 3 formation would have been stable. He projected a 2026 cost of risk between 5.5% and 6%, aiming to maximize risk-adjusted NIM.

Yuri Fernandes questioned the drivers behind the significant improvement in net interest margin (NIM), particularly in personal and real estate loans, and requested clarification on the strategy to 'reshape' the credit card portfolio.

Answer

CFO Santiago Horacio Stel attributed the NIM growth to higher yields from the new private payroll product and the repricing of the mortgage loan front book. SVP Alexandre Riccio de Oliveira clarified that 'reshaping' the credit card portfolio involves increasing the interest-earning portion through fixed financing and installment products for customers.

Yuri Fernandes questioned the reasons for higher taxes on revenue in the quarter, asked for the outlook on fee income for 2025, and followed up on the dividend policy, asking if paying dividends was the best use of capital for a growth company.

Answer

Executive Santiago Stel attributed the higher tax to revenue growth and a larger-than-usual Interest on Capital (IOC) payment that should normalize. Executive Alexandre De Oliveira projected continued positive trends in fee income driven by hyper-personalization. Executive João Vitor Nazareth Teixeira de Souza explained the dividend policy as a balance, aiming to reward shareholders while maintaining a 20-25% payout ratio that doesn't sacrifice growth, supported by organic capital generation and strong fee revenues.

Yuri Fernandes questioned the quarter-over-quarter decrease in nominal core capital despite higher earnings. He also followed up on the significant increase in personnel expenses, even excluding Inter Pag, asking for the key drivers and future outlook.

Answer

Executive Santiago Stel attributed the capital decrease to three factors: goodwill from the Inter Pag acquisition, JCP payments from the bank to the holding company, and the mark-to-market of investment securities. Regarding personnel costs, he explained that after a period of headcount reduction, the company is now investing in top talent, particularly in technology, and expensing more variable compensation tied to higher net income. He anticipates future operational leverage from automation and AI.

Yuri Fernandes asked for an explanation for the significant increase in Stage 2 loans, particularly in credit cards, and questioned why Inter, an IFRS reporter, was impacted by the Brazilian 4966 accounting resolution.

Answer

Executive Santiago Stel clarified that the rise in Stage 2 loans was a direct result of the 4966 accounting requirement, which mandates reassigning loans with a higher probability of default from Stage 1, and was not due to performance deterioration. He further explained that while Inter reports under IFRS, its Brazilian banking entity must comply with local regulations like 4966, which have certain minimums that are more rigid than IFRS.

Yuri Fernandes from JPMorgan Chase & Co. questioned the capital outlook, specifically if CET1 is expected to remain around 11% in 2026 despite upcoming prudential adjustments (e.g., 49.66, operating risk) and the capital consumption implied by the 9.5% portfolio growth guidance.

Answer

Investor Relations Officer André Carvalho and CFO Cassiano Scarpelli confirmed that CET1 is expected to remain around 11% throughout 2026, with fluctuations. They stated that all regulatory measures and portfolio growth have been computed, and the bank has strong discipline in capital management, constantly monitoring DTA and evaluating opportunities. CEO Marcelo de Araújo Noronha expressed confidence in potentially surprising the market positively on common equity.

Yuri Fernandes from JPMorgan Chase & Co. asked for an explanation for the increase in Deferred Tax Assets (DTAs) during the quarter and inquired about the expected trajectory for their consumption.

Answer

Executive Cassiano clarified that the DTA increase was a one-off event related to provisions made to neutralize gains from a comprehensive transaction program for fiscal and labor claims. He stated it was not related to credit origination. The bank's financial report outlines a ten-year scenario for consuming the DTAs without impacting capital, supported by loan growth and IOC payments.

Inquired about the reason for a slight increase in Deferred Tax Assets (DTAs) during the quarter and the expected trajectory for their future consumption.

Answer

The increase in DTAs was a specific, one-off event related to provisions made to neutralize gains from a comprehensive transaction program (PTI), not from credit origination. The bank has a 10-year plan to consume its stock of DTAs without impacting its capital base, as detailed in its financial reports.

Yuri Fernandes asked for a deeper explanation of the 20 basis point expansion in the client NIM, questioning the drivers between funding costs and loan mix, and the sustainability of this trend given the growth in safer, lower-margin credit lines.

Answer

An executive explained that the positive contribution from lower funding costs is a cumulative process that will continue to provide benefits throughout 2025. Executive Marcelo de Noronha added that the primary driver of the NIM expansion was not just funding, but a strategic shift in the asset mix. The bank grew its higher-margin individual and SME loan portfolios while reducing the lower-margin wholesale loan book, leading to a higher overall yield and NII growth.

Yuri Fernandes asked about the expected speed of the loan spread recovery to historical levels and whether the bank's structural cost of risk can return to past lows given the current environment.

Answer

Executive Marcelo de Noronha stated the expectation is to return to historical cost of credit levels over time, contingent on the loan mix and risk appetite. He did not provide a specific timeline for spread recovery but affirmed the goal is to deliver better results. CFO Cassiano Scarpelli added that while cost of credit reduction was the main ROE driver this year, revenue growth will be the primary driver going forward.

Yuri Fernandes from JPMorgan Chase & Co. asked about the pace of margin recovery, questioning how quickly spreads could return to historical levels of 9.7-10%. He also inquired if the bank's structural cost of risk is now higher than in the past, or if it can revert to historical norms.

Answer

Executive Marcelo de Noronha stated the expectation is to return to historical cost of credit levels over time, contingent on the loan mix. He noted that the spread recovery curve depends on risk appetite and mix, without providing a specific timeline. CFO/CTO Cassiano Scarpelli added that while cost of credit reduction was the main ROE driver this year, future ROE improvement will be driven more by revenue growth.

Yuri Fernandes from JPMorgan inquired whether Banco Santander-Chile's guidance for 2026 included the reduction in Getnet stakes, asking about its relevance for ROE, NII guidance, and any potential slowdown in fee growth. He also questioned the reported Net Promoter Score (NPS) of 37 for the SME business and asked about other potential synergy areas with the parent company, similar to Getnet.

Answer

Cristián Vicuña, Head of Strategy and Investor Relations, clarified that the Getnet transaction would result in an increase in the minority stake in the P&L, with a negligible impact on total P&L (less than 1%) and ROE (~20 basis points), already included in the 22-24% ROE guidance. He confirmed the SME NPS of 37, noting it's typical for the Chilean industry, and mentioned existing synergies with Santander Asset Management and Santander Consumer Finance, as well as the parent group's recent acquisition of an annuities company in Chile.

Yuri Fernandes from JPMorgan asked if the bank's guidance incorporates the Getnet stake reduction, its relevance for ROE and non-NII guidance, and if the fee growth slowdown reflects this or other factors. He also questioned the reported SME Net Promoter Score (NPS) of 37, asking if it was accurate and satisfactory. Additionally, he explored potential synergies and optionalities with the parent Santander Group in other business areas beyond existing partnerships.

Answer

Cristián Vicuña, Head of Strategy and Investor Relations, clarified that the Getnet stake reduction is included in the guidance, resulting in a minor increase in minority interest in the P&L (less than 1% of total P&L) and a negligible ROE impact of approximately 20 basis points, within the 22%-24% range. Regarding SME NPS, he confirmed 37 is typical for the local industry, though the bank aims for closer to 50. For synergies, Cristián Vicuña mentioned existing operations like Santander Asset Management and Santander Consumer Finance, leveraging auto lending alliances, and noted the Santander Group's recent acquisition of an annuities company in Chile, emphasizing regulatory separation between banks and annuity businesses.

Yuri Fernandes inquired about the specifics of the Bansa deconsolidation, including its financial impact, and asked for the loan growth outlook for 2025, questioning which segments would drive potential acceleration.

Answer

Cristian Vicuna, Chief of Strategic Planning and Investor Relations, explained that the Bansa deconsolidation was a non-cash accounting change with no impact on net income, as the bank never had ownership. He projected high-single-digit loan growth for the system in 2025, driven by improving GDP, lower interest rates, and normalized household liquidity. He specified that growth for Santander-Chile would come from consumer and auto loans, as well as SME lending supported by the Getnet ecosystem, while CapEx-related commercial lending remains an uncertainty.

Yuri Fernandes from JPMorgan Chase & Co. questioned how Itaú Unibanco's strong performance and deliverables in the SME segment, including the launch of Itaú Emps, will impact the bank's overall profitability and Retail ROE, considering the segment's historically high ROIs and potential competitive pricing pressures.

Answer

Milton Maluhy Filho, CEO of Itaú Unibanco, explained that the SME segment (micro, small, and medium companies, including Middle Market) has delivered extraordinary results due to strategic reorganization, portfolio management, and disciplined capital allocation. He noted that while the segment is highly profitable, the bank expects to increment the bottom line rather than see an expansion of profitability in the segment itself, given its already high returns. Maluhy Filho emphasized the importance of integrated value propositions, like Rede's integration, and the role of the AI-powered Emps platform in enhancing client engagement and efficiency without necessarily expanding ROE further.

Yuri Fernandes from JPMorgan Chase & Co. asked how the strong deliverables and growth in the Small and Medium-sized Enterprise (SME) segment, including significant volume and portfolio expansion, are expected to impact Itaú Unibanco's overall profitability (ROE), given the historical high ROIs in this segment.

Answer

Milton Maluhy Filho, CEO of Itaú Unibanco, stated that the SME segment (micro, small, and medium companies, including middle market) has delivered extraordinary results due to strategic reorganization, portfolio management, and capital allocation discipline. He highlighted the integration of Rede with the bank as fundamental for an integrated flow vision. While the segment already operates at a very high profitability level, he expects an increment to the bottom line in 2026 rather than an expansion of profitability within the segment itself. He also noted the significant catch-up in retail profitability since Q3 2022.

Yuri Fernandes from JPMorgan asked about the trajectory of the weaker fee income line, particularly checking account tariffs, and sought commentary on the performance of other fee-generating businesses like insurance and asset management.

Answer

President & CEO Milton Maluhy Filho acknowledged that checking account fees are on a downward trend as the bank re-signifies value packages, but noted its declining relevance to the total. He highlighted strong performance in other areas, such as insurance, which grew significantly year-over-year, and asset management, which had strong performance fees, offsetting weakness in DCM due to lower market volumes.

Yuri Fernandes from JPMorgan Chase & Co. asked for the outlook on the wholesale bank, specifically regarding the impact of higher interest rates on DCM origination and any concerns about asset quality.

Answer

CEO Milton Maluhy Filho described the wholesale portfolio as well-positioned with strong ratings and spreads. He expects a weaker year for capital markets in 2025, with volumes potentially down 30-40% from 2024's record year. He stated there is no foreseen credit crisis in wholesale, as the portfolio is high quality and any concerning cases are already heavily provisioned.

Yuri Fernandes asked about the drivers of the wholesale segment's performance, noting that while the loan portfolio grew and ROE increased, the Net Interest Income (NII) remained flat.

Answer

CEO Milton Maluhy Filho attributed this dynamic to three factors: a change in internal capital allocation methodology and the drop in the Selic rate, both of which lowered the NII from remunerated capital; and the fact that a significant portion of the value from wholesale clients is captured in fees and services (like DCM), which appear in a different revenue line, thus boosting overall ROE despite flat NII.

Yuri Fernandes inquired about the worsening delinquency in the SME segment, particularly among smaller companies, and the impact of high interest rates. He also sought clarity on the outlook for Provision for Loan Losses (PLL) in 2026.

Answer

CFO Gustavo Alejo Viviani explained that pressure is concentrated in smaller enterprises within the SME segment, not specific industries. CEO Mario Roberto Opice Leão added that while the SME segment remains highly profitable, recent performance in late 2025 and Q1 2026 shows a need to calibrate growth appetite for subclusters to maintain profitability above 20%. He noted that PLL might still increase due to carryover effects in some subsegments, despite de-risking efforts.

Yuri Fernandes asked about the worsening delinquency in the small and medium-sized enterprises (SME) segment, particularly for smaller companies, and inquired about the expected evolution of Provision for Loan Losses (PLL) for 2026 given the current macroeconomic context.

Answer

CFO Gustavo Alejo Viviani clarified that the pressure on SME delinquency is concentrated in smaller enterprises, not specific industries. CEO Mario Roberto Opice Leão emphasized Santander Brasil's commitment to the SME segment, aiming to double its business, but acknowledged the impact of high interest rates on smaller companies. He stated that while no specific guidance is given, PLL will be managed to be compatible with healthy portfolio growth, with de-risking efforts continuing in 2026.

Yuri Fernandes asked about the weaker market NII, attributing it to fewer business days and high interest rates, and sought expectations for its short-term and medium-term improvement. He also inquired about the bank's goal of near-zero nominal expenses and the expected efficiency ratio, given potential revenue improvements.

Answer

CEO Mario Leão stated that achieving an efficiency ratio of 30% is feasible over the next few years through disciplined jaws ratio management. CFO Gustavo Alejo explained that Q3 2025 market NII was impacted by expected higher Selic rates and more business days, but was within plan. He reiterated that the 18-month hedging policy, two-thirds complete, has reduced negative sensitivity. He noted that while Selic impacts market NII, it also benefits client NII, and long-term positions create negative carry in an inverted curve. He expects a much more stable market NII by the end of the 18-month process in 2026, with less interest rate risk.

Yuri Fernandes asked for clarification on the weaker market NII, which practically doubled in the quarter, attributing it to fewer business days and high interest rates. He sought expectations for its short-term and medium-term performance, hoping for improvement next year. He also asked for elaboration on the bank's goal of near-zero nominal expenses and the expected efficiency ratio, given potential revenue improvements.

Answer

CEO Mario Leão stated that while he couldn't give guidance, the bank aims for an efficiency ratio of 30% over the next few years, driven by consistent jaws ratio management. CFO Gustavo Alejo explained that Q3's market NII was impacted by a higher Selic rate and more business days, which were planned. He reiterated that the 18-month hedging policy, two-thirds complete, aims to reduce negative sensitivity to interest rates, leading to a more stable market NII by next year. He also noted that a higher Selic rate benefits client NII, and the negative carry on long-term positions is greater for all banks with such holdings.

Questioned the recent drop in product spreads despite the bank's stated intention to grow in higher-risk areas like SMEs and consumer finance. He asked if and when NII margins are expected to improve, supported by growth in retail deposits.

Answer

The executives confirmed the assumption that margins should improve. The speed of this improvement will depend on the pace of portfolio growth, with SMEs and the growing retail deposit base being positive drivers. They noted it's difficult to give a precise timeline but the direction is positive. It was also mentioned that margins from new credit cards take time to materialize and that they have been more disciplined on ROE with large corporates, which temporarily impacted portfolio growth.

Yuri Fernandes asked for clarification on the 46% quarter-over-quarter increase in the corporate segment, specifically regarding the mentioned hedging strategy. He also inquired about expectations for people expenses, including salaries and bonus provisions, given the heavier bonus line this quarter.

Answer

CFO Victor Mansur explained that the corporate segment's performance is tied to DCM activity, with hedging solutions for companies issuing debt (e.g., inflation-linked bonds hedged to CDI plus) being a key driver. He also noted the importance of originating credit operations for securitization. Regarding bonuses, Mansur stated that higher investment banking performance and new hires (almost 500, mostly sales force) contributed to the increase in salary growth and bonus provisions.

Yuri Fernandes asked for clarification on the 46% quarter-over-quarter increase in corporate revenues, specifically regarding the hedging strategy, and inquired about expectations for people expenses, including salaries and bonuses, given a heavier bonus line this quarter.

Answer

Victor Mansur explained that the corporate business performance is tied to DCM activity, with hedging solutions for companies issuing debt (e.g., inflation-linked bonds hedged to CDIplus) being a main driver. He also noted the importance of credit origination for securitization. Regarding bonuses, he attributed the increase to higher performance in wholesale banking and the hiring of almost 500 new employees, mostly for sales force expansion, over the year.

Yuri Fernandes of JPMorgan Chase & Co. asked about XP's corporate lending strategy, questioning its importance to the overall ecosystem given that the corporate segment is not contributing to asset growth.

Answer

Chief Financial Officer Victor Mansur clarified that XP's corporate lending strategy is based on an 'originate-to-sell' model. He stated that any growth in the corporate credit portfolio is temporary, as the assets are intended for securitization and subsequent sale to retail clients. Mansur emphasized that while they could be more active, corporate lending occupies the same risk appetite as capital markets, and they will not expand the portfolio beyond established risk limits.

Yuri Fernandes from JPMorgan Chase & Co. questioned the outlook for XP's revenue mix, asking when the equities business might stabilize and how to view the fixed income segment, which has now become the largest revenue source. He also asked for the reason behind the quarter's increase in Expected Credit Losses (ECL).

Answer

CFO Victor Mansur explained that equity revenues are dependent on a market recovery in volumes and offerings, while fixed income is structurally larger now and unlikely to shrink significantly. CEO Thiago Maffra clarified that the higher ECL was a one-off event related to a single credit and is expected to normalize to around BRL 100 million in future quarters. He also confirmed the company's positive ROE outlook does not depend on a change in the current revenue mix.

Yuri Fernandes sought clarification on the pro-forma BIS ratio after the announced capital distribution and asked for an explanation for the significant quarter-over-quarter decrease in the 'Other Revenue' line.

Answer

CFO Victor Mansur detailed the BIS ratio's expected decline from 21.5% to 18.3% after the dividend and buyback. He attributed the 'Other Revenue' drop to a one-off P&L charge from undoing a hedge related to a bond tender, noting the new debt is more cost-effective long-term and the line should normalize.

Yuri Rocha Fernandes from JPMorgan Chase & Co. asked about the outlook for Credicorp's operations in Bolivia, specifically how the recent political shift and new president might impact performance, potentially turning it into a tailwind after previous volatility. He also inquired about Credicorp's capital allocation strategy, including payout and dividends, and potential areas for inorganic acquisitions.

Answer

CEO Gianfranco Ferrari, drawing on his experience running the Bolivian bank, expressed positive sentiment regarding the new government's pro-market signaling and professional appointments, viewing BCP Bolivia as a potentially relevant 'option value' going forward. CFO Alejandro Perez-Reyes stated that while business growth consumes capital, Credicorp expects to maintain increasing ordinary dividends and potentially extraordinary dividends, with payout ratios likely higher than this year's 58%, possibly in the high 60s. Gianfranco Ferrari added that there are no relevant M&A opportunities as of now, and capital not needed for growth or inorganic operations will be returned to shareholders.

Yuri Fernandes asked about the outlook for Bolivia, specifically if the recent political shift and new president could provide a tailwind after a volatile year, and if any securities gains were expected. He also inquired about Credicorp's payout and dividend expectations, given strong capital accumulation, and potential inorganic acquisition areas.

Answer

CEO Gianfranco Ferrari expressed positive sentiment regarding Bolivia's new government, citing pro-market signaling and professional appointments, viewing BCP Bolivia as a potentially relevant "option value." CFO Alejandro Perez-Reyes stated that the payout ratio for this year was 58% and expects higher ratios in the high 60s going forward, with increasing ordinary dividends and potential extraordinary dividends. Gianfranco Ferrari added that no relevant M&A is currently planned, and capital not needed for growth or M&A will be returned as dividends.

Yuri Fernandes from JPMorgan Chase & Co. asked about the slight quarter-over-quarter dip in low-cost deposits, questioning if it was seasonal. He also asked for an update on the outlook for extraordinary dividends, given the company's strong capital generation.

Answer

CEO Gianfranco Ferrari confirmed the dip in low-cost deposits was seasonal and highlighted the broader positive trend of cash usage in Peru declining from 95% to 64% since 2013, largely driven by Yape. Regarding dividends, Ferrari stated that while the policy is unchanged, no extraordinary dividend will be paid this year because the cash was used for the S/1.6 billion payment to SUNAT. CFO Alejandro Perez-Reyes added that this is a one-time cash impact for this year and does not change expectations for ordinary and potentially extraordinary dividends next year.

Yuri Fernandes asked for more detail on loan growth dynamics, expressing concern that the soft Q1 growth makes achieving the full-year average growth guidance of 3.5% more challenging and questioned management's confidence in this target.

Answer

An executive, likely CFO Alejandro Perez-Reyes, reaffirmed confidence in the guidance. He stated that loan sales have been historically strong in recent months and that growth is expected to pick up in Q2 and accelerate further in Q3 as the company becomes more comfortable with its risk capabilities. He also noted that large prepayments in the wholesale segment in March impacted the Q1 figure.

Yuri Fernandes of JPMorgan asked for color on capital distribution and dividend payout expectations. He also inquired about the progress towards the 2026 guidance for new initiatives to contribute 10% of risk-adjusted revenues, noting Yape's performance.

Answer

CFO Alejandro Perez-Reyes reiterated the policy of paying out all capital not needed for business growth, with the goal of a growing dividend. He cited minimum capital ratios of 11.5% for BCP and 13.5% for Mibanco. He also confirmed that the company is still aiming for all disruptive initiatives combined, with Yape as the main contributor, to generate over 10% of risk-adjusted revenues by 2026.

Yuri Fernandes asked if there was potential upside to the 18% sustainable ROE target given strong performance, and also inquired about the loan growth outlook for 2025.

Answer

Chief Financial Officer Alejandro Perez-Reyes and Chief Executive Officer Gianfranco Piero Ferrari de Las Casas reaffirmed the 18% sustainable ROE target, noting potential headwinds from regulation and their continued appetite to invest in disruptive initiatives. Regarding loan growth, they expect it to pick up in 2025, driven by improving business confidence in the wholesale segment and increased risk appetite in the retail segment.

Yuri Fernandes asked for a deeper explanation of the rapid deterioration in retail asset quality, questioning the outlook for NPLs and the coverage ratio. He also explored whether the concept of 'principality,' or a client's primary bank relationship, impacts credit performance amid fintech competition.

Answer

CFO Gonzalo Fernández Covaro attributed the NPL spike in personal loans to aggressive growth in riskier segments from March 2024 to March 2025, a strategy since reversed. He noted credit card issues stemmed from existing clients' income pressures. He projects the NPL coverage ratio will end the year between 120-130%. Regarding 'principality,' he believes it is key for profitability but not a primary driver of NPLs, which are caused by financial distress.

Yuri Fernandes of JPMorgan Chase & Co. requested clarification on the exact financial impact from the government's debt reprofiling. He also asked about the bank's current lending policy for its US dollar-denominated loan portfolio.

Answer

Pablo Firvida, Institutional Relations Manager, clarified that the impact from the debt reprofiling was approximately MXN2 billion, which the bank expects to recover. Regarding dollar-denominated loans, he stated the bank's decision was to halt new originations, except for exporters, to maintain high liquidity and is now offering peso-denominated loans to that segment instead.

Yuri Fernandes questioned the bank's timid loan growth outlook, which is below nominal GDP, and asked when an acceleration might occur. He also sought to understand the sustainability of strong fee income growth, its key drivers like mutual funds, and the strategy behind the Banchile Pago acquiring business.

Answer

Chief Economist Rodrigo Aravena explained that loan growth is currently decoupled from GDP due to high rates and weak domestic demand, but he expects a normalization with a loan-to-GDP elasticity of around 1.5x in the long term. Head of IR Pablo Mejia stated that fee growth in the mid-to-high single digits is sustainable, driven by customer growth (fueled by FAN accounts) and cross-selling. He added that the Banchile Pago acquiring business, launching in Q4, will target the SME and middle-market segments.

Yuri Fernandes inquired about Banco de Chile's strategy for deploying its significant excess capital, questioning potential dividend increases, M&A, or accelerated growth. He also asked for the target coverage ratio for allowances to loans, including additional provisions.

Answer

Executive Daniel Ignacio Galarce Toro explained that the bank aims to maintain capital buffers for future growth and to face the final phase of Basel III implementation, including pending Pillar II regulations. He stated that the 60% dividend payout ratio is the baseline, with higher payouts contingent on lower-than-expected loan growth or higher-than-expected results. Executive Pablo Ricci added that the high provision coverage provides a crucial buffer in uncertain times and there is no specific timeline for reducing it to pre-pandemic levels.

Yuri Fernandes followed up on the 18% ROE guidance, noting the drop from 23% in 2024 implies a significant earnings decrease and asked for the underlying drivers. He also questioned if the current high net interest margins (NIMs) represent a 'new normal' or if they are expected to decline to pre-pandemic levels.

Answer

Executives Pablo Ricci and Rodrigo Aravena clarified the ROE guidance is based on conservative macro forecasts (lower inflation, lower rates) and the absence of the prior year's FCIC program benefits. Regarding NIMs, they argued that the current environment of higher rates and steeper yield curves, combined with the bank's strong demand deposit base, should support margins at levels similar to the 2025 guidance for the medium term, rather than reverting to lower pre-pandemic levels.

Yuri Fernandes inquired about the potential impact of upcoming local and presidential elections on loan growth. He also asked about the bank's plans for its excess capital, questioning if a special dividend or M&A could be expected given the high ROE and capital accumulation.

Answer

Executive Rodrigo Aravena addressed the election question, acknowledging political uncertainty as a risk but emphasizing that the Chilean economy is currently growing above its 10-year average, suggesting a positive outlook for activity. Executive Daniel Ignacio Galarce Toro responded on capital, stating that the dividend decision (typically a 60% payout) is made annually by shareholders in March. He noted that with Basel III implementation still in progress, the bank is comfortable with its strong capital position to address future requirements, implying no immediate plans for a special dividend.

Yuri Fernandes sought a simpler framework for thinking about excess capital generation, suggesting a comparison of RWA growth to tangible ROE. He also asked about the company's plans for its treasury shares acquired through buybacks, specifically whether they would be canceled or used for compensation.

Answer

Executive Mateus Schwening agreed with the long-term logic but cautioned that short-term regulatory changes complicate RWA calculations, making the multi-pillar framework (including credit ratings and net cash) more appropriate for now. He confirmed that the most likely outcome for the repurchased shares is that the majority will be canceled, with a portion used to satisfy share-based compensation obligations.

Inquired about the significant drop in securitization costs, the strategy regarding funding mix (deposits vs. securitization), the potential use of their growing net cash balance, and whether the guidance implies a decline in cash earnings.

Answer

The company is leveraging its growing and low-cost deposit franchise, which reduces the need for securitization, though they will continue to balance all funding sources. The growing cash balance is currently being used to support faster-than-expected growth and internal investments. They are actively assessing capital allocation, including M&A, but have no immediate plans to announce. The write-off of POS is a non-cash item that doesn't impact cash flow.

Focused on the credit card business, asking about the strategy to regain market share and grow the portfolio, particularly with individuals. He also asked for an update on the Previ pension fund and the impact of the interest rate curve on its results.

Answer

The bank deliberately slowed its credit card business to overhaul its onboarding platform. With improved technology and security, they now see a significant opportunity to grow the portfolio. Regarding Previ, they anticipate a positive contribution of around BRL 700 million over the next two quarters.

Asked about the outlook for fee income, particularly concerning credit card fees and the impact of Cielo, and whether there could be a positive surprise beyond the current guidance.

Answer

The credit card segment is challenging, but the bank is working to recover fee income through customer engagement, growth in fund management, and specific promotions. They also anticipate a boost from renewed capital markets activity. While credit cards are now also a key tool for customer acquisition and loyalty, the bank is confident in meeting its overall fee guidance by leveraging multiple revenue streams.

Sought clarification on the positive 2024 income outlook, asking if the high single-digit growth estimate includes contributions from the Argentine operation (Patagonia). He also asked about the specific drivers behind the strong quarter-over-quarter growth in market NII.

Answer

The executive clarified that the high single-digit earnings growth estimate for 2024 is based primarily on the Brazil operation. They are budgeting for a smaller, less relevant contribution from Patagonia in 2024 compared to its current 7% share of NII. The strong market NII was driven by opportunities in securities spreads and liquidity.

Yuri Fernandes from JPMorgan Chase & Co. asked about the dividend outlook for 2024 given the lower ROE guidance, the expected trajectory for cost of risk, and the sensitivity of net interest margins to potential decreases in interest rates.

Answer

CFO Diego Fernando Solano Saravia explained that dividend policy is a shareholder decision made annually based on cash flow and bank solvency, making it premature to speculate. He expressed confidence in the 2% cost of risk guidance, citing stabilizing PDL formation and positive macro factors. Regarding rate sensitivity, he highlighted that the normalization of funding costs, which have detached from the central bank rate due to regulatory changes, will be a more significant positive driver for margins than the rate cuts themselves.

Yuri Fernandes of JPMorgan Chase & Co. inquired about the rationale for the recent sale of Grupo Aval's stake in BHI, the expected impact of future interest rate cuts on net interest margins, and the outlook for dividend payouts given the current ROE and loan growth guidance.

Answer

CEO Luis Carlos Sarmiento Gutierrez explained that the BHI sale was a strategic move to unlock value, as BHI had grown to a size comparable to its parent, Banco de Bogotá, complicating capital decisions. CFO Diego Fernando Solano Saravia addressed margins, stating that recent compression was due to a temporary spike in funding costs from new NSFR regulations, not just central bank policy. He expects margins to improve in 2023 as this distortion normalizes. Regarding dividends, Mr. Sarmiento noted that consumer-oriented banks will be more cautious, while commercial banks are expected to maintain their historical 40-50% payout policy.