Itaú Unibanco - Earnings Call - Q3 2025

Transcript

Gustavo Rodrigues (Investor Relations Officer)

Hello. Good morning everyone. My name is Gustavo and it is a pleasure to have you joining us for our third quarter of 2025 earnings video conference. As always, Milton will walk you through our performance and afterwards we'll open the floor for a Q and A session where analysts and investors will be able to interact directly with us. Before handing over to Milton, I would like to share a few instructions to help you make the most of today's event. For those accessing this video conference via our website, there are three audio options available: the entire content in Portuguese, the entire content in English, or the original audio. The first two options offer simultaneous translation. To select your preferred option, simply click on the flag icon in the upper left corner of your screen.

Questions can also be submitted via WhatsApp to the number displayed on your screen. Today's presentation is available for download on the hot site and as always on our investor relations website. With that, I'll now hand over to Milton and I'll see you again shortly for the Q and A session. Milton, over to you.

Milton Filho (CEO)

Good morning everyone. Welcome. It is a pleasure to be here with you once again to present our third quarter 2025 results. Thank you, Gustavo. In a moment I will join Gustavo and Gabriel for our Q and A session. The objective of this presentation, as always, is to share with you an executive and objective overview so that we have quality time for discussion afterwards. I believe it is important to have a Q and A session with adequate time and depth. Let's move on to the numbers.

I will begin with the main highlights. I will cover results, ROE, Capital Services and insurance, the loan portfolio and long term delinquency. The first highlight is that we closed the quarter with very strong net income. BRL 11.9 billion, representing growth of 3.2% compared to the second quarter of 2025 and 11.3% compared to the third quarter of 2024. That was, therefore, we continue to expand our bottom line. Just as important as the bottom line is profitability. On a consolidated basis, our ROE reached 23.3% and in Brazil ROE was 24.2%. We posted a profitability expansion compared to the previous quarter. What I always like to emphasize, and we include this in the footnotes for you, is the capital adjustment. As you saw on the first slide.

In terms of capital, we closed the quarter at 13.5% of CET1, adjusting the capital for our board's approved risk appetite or to the CET1 level we have seen in the market. We are running at 25.4% ROE on a consolidated basis and in Brazil at 26.7% for the period. This is a very strong profitability level reaching almost 27% of ROE in Brazil. How did we achieve this result? First, capital showed significant expansion in the quarter with growth of 40 basis points. Compared to September 2024, we saw a slight decrease, but it is important to remember that we had a relevant additional dividend distribution this year. Moving on to services and insurance, this was a very solid and strong quarter for this line which grew by 4.0% in the quarter and 7.1% year-over-year.

Regarding the loan portfolio, we closed the quarter at BRL 1.4 trillion, a growth of 0.9% compared to June and a 6.4% growth year-over-year. Excluding the FX impact, the portfolio grew by 1.7% in the quarter and 7.5% year-over-year. Another highlight is delinquency. We have been able to grow the loan portfolio with high quality credit and with very well controlled delinquency levels. Here I am highlighting long term delinquency, but you will see that the portfolio remains very well behaved in any credit indicator such as cost of credit, stages, coverage, short and long term delinquency. I would like to highlight the growth in our loan book. Let me start by focusing on the individual segment. We grew by 1.0% quarter-over-quarter and 6.5% year-over-year. In this table we present a breakdown of the segment.

I would like to highlight mortgage loans which grew by 2.0% in the quarter and 15.2% year-over-year. In the first nine months of this year we originated BRL 24 billion in mortgage loans, a 24% year-over-year increase. Our market share among private banks is 47% in this product which is highly relevant for client relationships and for our long term vision. Structurally, we have a higher savings balance among private banks which also allows us to deliver long term value to our clients. Regarding the quality of the individual's portfolio growth, focusing first on credit cards, we grew by 4.3% in the quarter. The consolidated growth was 0.8%. When we look at the mid and high income segments, we posted a significant growth of nearly 24% year-over-year. In personal loans, we posted a 1.4% growth.

It is important to break down this line. It is composed of consumer credit, which grew by 3.1% in the quarter and 9.6% year-over-year, revolving credit, which grew by 5% in the quarter and 15% year-over-year, and refinancing credit, which is the portfolio we aim to reduce, which declined by 3.4% in the quarter and 12.4% year-over-year. This shows that beyond simply looking at aggregate performance, it is important to analyze the breakdown within each line we disclose. In payroll loans, the highlight is the strong growth in private sector, up by 9.5% in the quarter and also up by 9.5% year-over-year. The public sector portfolio posted a slight decrease, and for INSS beneficiaries, which are the retirees, the main effect comes from the interest rate cap implemented some time ago.

We are currently facing our highest funding costs, which has led us to reduce origination in some channels, especially through banking correspondence. Today, most of our production is already being done through our own channels and we have stopped operating in some segments due to low spreads and low returns.

Moving to the SMEs loan portfolio, it was up by 1.1% in the quarter and 7.5% year-over-year. In Brazil, the portfolio grew by 1.2% in the quarter and 7.8% year-over-year, and the total portfolio grew by 6.4% year-over-year. Here we present the breakdown. Excluding the FX impact for SMEs, growth would have been 8% year-over-year. For large companies, nearly 10%, and in Latin America, 4.5%. The total portfolio grew by 6.4% year-over-year and would have grown by 7.5% excluding the FX impact. The highlight in SMEs is the government programs, which posted a growth of 10.9% in the quarter, a very solid result. When we look at the year-over-year performance, growth was over 110%.

I would like to emphasize that this is a portfolio that is growing significantly but with high quality. We have been originating through these lines with shorter grace periods of under 12 months. While we have seen the market originating with longer grace periods closer to 24 months. Therefore, there is a difference in approach. Again, each organization or each bank has its own strategy. I am only highlighting how we have been doing business. Moving on to margins, I will focus first on NII with clients. I would like to draw your attention to the fact that considering the effect of working capital, the NII grew by 0.5% in the quarter or BRL 200 million. Average volume, product mix and spreads had very minor effects. Additionally, there was a calendar effect.

We know that this quarter had more calendar and working days, with five additional working days and one extra calendar day, which impacts liabilities and assets differently in the way we disclosed the managerial results. In the Latin America and others line, we consider wholesale bank structured operations, and this is where we always expect some volatility. I would like to highlight that the previous quarter was very strong in terms of margin. We had already mentioned that it was an exceptional quarter, so it is natural that we see a smaller effect of these structured operations when comparing quarter-over-quarter. It is important to emphasize that in the year-over-year comparison, which is perhaps the best indicator to analyze our ability to generate NII with clients, we posted robust growth of 13.4%. Moving on to NIM first, on a consolidated basis we see a slight decrease.

Nothing to be concerned about. NIM is very much in line with what we posted in the first quarter of 2025. As I mentioned, the previous quarter was exceptional. The risk-adjusted NIM also performed this way. The risk-adjusted NIM was still higher than in the first quarter but slightly lower than in the second quarter with a minor variation for the annualized average margin. In Brazil, this effect is even clearer. We posted significant NIM growth in Brazil 9.5%, 9.3%, 9.8%, and 10% in 2Q25, which was when I emphasized that it had been an exceptional quarter. Now we have returned to a very high level of 9.8% and exactly the same NIM as in the first quarter of 2025. The risk-adjusted NIM reached 6.7%, which is even better than the NIM posted in the first quarter of 2025 but showing a slight decrease quarter-over-quarter.

This demonstrates the strength and quality of our NII with clients. Now, regarding NII with the market, although the numbers may appear very stable, we know this is the hardest line to estimate in our budget exercise. Given the inherent volatility behind these figures, what did we highlight at the beginning of the year? First, we provided guidance indicating that NII with the market would be between BRL 1 billion and BRL 3 billion for the year. The main effect, as I mentioned previously, is that the capital index hedge costs would increase throughout the quarters. This was the only number we could be more certain about when we disclosed the 2025 guidance and it is evident when we look at the accumulated results.

We delivered BRL 3.5 billion in market NII for the first nine months of 2024 and the capital index hedge cost was BRL 900 million in the first nine months of 2025. Market NII was BRL 2.7 billion down from BRL 3.5 billion. The main effect was the cost for hedging the capital index which doubled in the period. In fact we have performed very well. Our NII with the market is very strong, very stable with a high alpha generation and a very accurate transfer price that avoids transfers between NII with clients and with the market. Our disclosures have been very transparent and in respect with that I will mention an update in our 2025 guidance. The only line that we will adjust is NII with the market. For obvious reasons it is a mechanical adjustment, a small one.

I will address this at the end of this presentation. Moving on to commissions, fees and results from insurance, I would like to make a few highlights. The first one is in the payments and collections revenues which grew by 3.7% in the quarter and 8.0% compared to the third quarter of 2024. For the nine month period, growth was 6.1%. What is the main highlight? We no longer refer to REDE as a separate acquiring business or company as REDE is fully integrated into our operations. Nevertheless, we believe it is important to highlight the total transaction volume which reached BRL 258 billion, an important increase of 6.6% in the quarter. This demonstrates our ability to integrate businesses and focus on client profitability. The total transaction volume grew by 12.8% year-over-year.

Another highlight is the revenue from advisory services and brokerage which posted a significant growth of 33.7% in the quarter, but a decline when comparing the accumulated results for the nine month period. I remind you that last year was by far our best year in DCM, so there is a market volume effect. Our market share demonstrates that we continue to present a very solid performance. We are leaders in fixed income origination and distribution with a 25% market share. In other words, one quarter of the market passes through the bank and we have originated BRL 91 billion over the nine month period. Another very relevant highlight is what we have been able to achieve year after year in our insurance business. We posted sound growth of 5.7% quarter-over-quarter and 17.8% year-over-year. Results for the first nine months were up by 17.1%.

This growth is well distributed between earned premiums, which were up by 14%, and the recurring result up by 17.3%. This performance has been very important for the bank's value creation, for expanding profitability, and for generating value across all our business channels. I am deeply pleased and satisfied with the evolution of our insurance business. Now, regarding asset quality, I will be objective in my remarks because as you will see in the credit indicators, the level of stability in our portfolio is truly impressive. Short term delinquency is very well controlled. I will focus on these figures when discussing large corporate performance in the next slide. Actually, to make it easier for you, let me zoom in on this information. In Brazil, for short term delinquency, you can see that the 15-90 days NPL for individuals remained absolutely stable, as did it for the SMEs portfolio.

There was an increase in this indicator for large corporates, but this is a specific case of a client that has been in stage three for many quarters with more than adequate provisions and we felt that it was time to let it move into delinquency and follow the regular flow. That is why I always say I do not like to track this indicator for large corporates. It has no correlation to either the cost of credit or the balance sheet effects. You will see that it has no impact on stage coverage, on migration between stages, nor on the cost of credit. It is only a representation of a client that was already properly provisioned in stage three and moved into delinquency. There is no cause for concern here. Again, this is a specific client for long term delinquency which does not have this impact.

You will note that there is great stability in the NPL indicators for Brazil, for Latin America, and considering all regions. When we break down the Brazilian operation by individuals, SMEs, and large corporate, we also see great stability. We have been able to grow with high quality within our strategy, maintaining a portfolio with a truly impressive level of provision and high quality. We have followed the asset quality indicators released for each industry, and when we compare our performance for each product against the industry figures, we note that we have performed much better than the market in terms of delinquency. In fact, in several products we have seen significant increases in long-term delinquency while NPL in our portfolio remains very stable.

We do not usually disclose our delinquency rate breakdown by product, but I can assure you that in addition to being at a much lower level than has been reported by industry, we continue to operate with great stability. While we have seen delinquency accelerate in the industry, especially the long term delinquency. I emphasize our long term vision, our capital allocation at the right price and our daily and active risk management. I believe the results speak for themselves. Moving on to the stages, I will go straight to the portfolio and coverage in stage two where you will note remarkable stability. Any volatility given the size of our portfolio does not generate or produce any material impact. Therefore, everything is within expectations with no points of concern. The same applies to stage three.

If you look at both the portfolio in stage three and the coverage in stage three, you will also see only very marginal variations. It is clear that this flow is dynamic because we do not migrate exposures to stages based solely on delinquency. Delinquency is one variable as I showed you when we disclosed the implementation of Resolution 4966. If you add up the non performing portfolios overdue by more than 90 days and compare it to the portfolios in the stages, the numbers are quite different because we look at prospective risk in this way, migrations due to asset quality deterioration are adjusted well before the client actually becomes delinquent. This is the case for large corporates. For example, as I mentioned earlier regarding this specific client that has been in stage three for many quarters with a performing loan.

I believe that this proactive and forward-looking dynamic is very important when managing our balance sheet. Our performance reflects this. Now I will briefly address two, the renegotiated portfolio and the cost of credit. I will first comment on the renegotiated portfolio. If you look at the credit-only portfolio, it continues to decline. In what we call the renegotiated portfolio, we break down what refers to the restructured portfolio and what refers to the renegotiated portfolio. The most important thing is that the ratio of the renegotiated portfolio over the loan book continues to fall. In other words, the nominal value is declining even though the loan book is growing. I believe that at some point we will reach an inflection and we may even see the nominal values rise.

That's why it's important to analyze the ratio to compare nominal values over the portfolio that has been growing over all these quarters. On the right hand side we present the figures considering 4,966 resolution which considers credit and securities. The story is the same. The amounts are higher because in this view we include securities, but we also see nominal declines over the period and the ratio also shows a very healthy performance even better than in the credit only view. This shows the high quality and strength of our portfolio. The cost of credit has been flat. We have been delivering a very consistent cost of credit and in relative terms we also have a very solid result. When we look at the figures for the nine months, despite the increase from BRL 25.9 billion to BRL 27.2 billion, the ratio fell from 2.7% to 2.6%.

Even though we see industry indicators deteriorating, our portfolios have been performing very well. I believe that risk management is our competitive advantage and it's something we strongly believe in. Changing gears to OpEx, we posted an increase in non-interest expenses in Brazil of 4.5% in the quarter. Remember that this is a quarter that historically is pressured by the union agreement and wage raises. We also have a volume effect with the operation performing very well. This is what we call good cholesterol, especially when we talk about volumes. The first nine months, year-over-year, growth in Brazil was 8.5% and 8.9% on a consolidated basis, including Latin America. All of this is absolutely in line with our expectations, which is the most important thing.

It was what we expected with the significant investments being made in the operation with a strong focus on top line generation. All of this is ultimately reflected in the efficiency ratio. It is not just about cost. For the sake of cost at the beginning of next year, I will share with you a very transparent view on costs for the future. The most important thing is to look at the trend. We closed the efficiency ratio for this nine month period at 36.9% in Brazil and at 38.8% on a consolidated basis. I remind you this is the lowest ratio in the industry when compared to Universal Bank's peers. In the calculation of this ratio, we include all the bank's expenses and do not leave any negative effects out of the indicator so that the number is very consistent and transparent for the market.

I believe this is a very relevant performance. If we look at the figures from 2019 to 2025, the path has been very healthy for the bank's operational leverage and efficiency. Next, let's talk about capital. First, just to clarify, we started the quarter at CET1 of 13.1%. As we can see, profit generation in the quarter was very strong with a positive contribution to capital of 80 basis points. As I mentioned, we are running with a profitability level of nearly 27% in Brazil, interest on capital provisioned and IOC maximization results in a payout slightly above 30% and leads to a capital consumption of about 40 basis points. This is already included in the ratio. Next we see risk weighted assets consumes 20 basis points. Finally, we have other prudential and equity adjustments that are practically flat.

All in all, CET1 moved from 13.1% to 13.5% in the quarter. We add 81 to the CET1 and we reached a Tier 1 capital ratio of 14.8% in September 2025. It's interesting to note that we no longer have any perpetual instruments issued in foreign currency. In other words, 100% of our AT1 instruments are issued in Brazilian Reais at a much more competitive cost. This liability management we carried out was very important for the bank's capital management. Finally, as I have already mentioned, the only line to be updated in the 2025 guidance is market NII. It is a minor adjustment. We originally expected between BRL 1 billion and BRL 3 billion for this line and that was our best expectation. It is great that we perform better than we expected.

Given that we only have a couple of months to account for, we are updating our Market NII expectation and narrowing the range. Thus, our best expectation for Market NII is between BRL 3 billion and BRL 3.5 billion. This table consolidates 2025 guidance. Except for the Market NII, every other line has been reaffirmed, which demonstrates our ability to consistently predict results for the year and share them with you at the beginning of the year. Of course, volatility is expected throughout the year. In the loan book we have the FX impact, so this is always something difficult to project. The fact is that we have very solid discipline and transparency and a high degree of predictability. I believe the most important thing is to have predictive capacity to be able to forecast and manage with a long-term vision. With that, I will conclude my presentation.

I would like to thank you once again for your participation. Now I will join Gustavo and Gabriel for the Q and A session. This was another solid and consistent quarter with very high profitability and strong results. Most importantly, behind these numbers is all the transformation the bank has been undergoing for many years. We are at a very advanced stage both in digital and cultural transformation and above all as a universal organization. I believe the strength of Itaú Unibanco is being this universal bank striving to be a leader in every segment in which we operate. We have managed to be leaders in several of them. As I always say, we have a very balanced portfolio with solid and consistent results in both wholesale and retail businesses which have been decisive for value creation. Most importantly, we are a 100% client centric organization.

All of our NPS and quality indicators have advanced materially. At the end of the day, the result is a consequence of a solid, strong franchise with a client centric and long term vision. We do not make decisions to maximize in the short term, nor do we grow the portfolio at the wrong price. We must maintain strong discipline in capital allocation and returns and naturally the results come in the long run, that is what I wanted to share with you. I will now join the others for the Q and A session. See you shortly.

Gustavo Rodrigues (Investor Relations Officer)

Thank you for the presentation, Milton. Now we have also Gabriel with us to start the Q and A. Let's remind you this is a two language session. We're going to answer the questions in the language that they're asked. Should you need any support with the translation, please choose your preferred audio, English or Portuguese, or you can submit the questions via WhatsApp. With that, let's go to the first question. Bernardo Gutman from XP. Bernardo, the floor is yours.

Good morning, everyone. Gustavo, Milton, Gabriel, thank you for the opportunity. Congratulations on the results. We're getting close to the end of the year. The bank should get into that phase of the discussion of the scenario for 2026. The scenario macro is mixed. The activity is firm, but with high interest rates and a credit market that is more selective. I wanted to understand how that context affects your strategic decisions for the bank for next year. Specifically in the growth of portfolio efficiency and capital allocation. Itaú gets at a turning point of the cycle with discipline and profitability. Maybe now the challenge is to balance, to grow in an efficient way and calibrated way in an environment that still demands caution. How would you do this balance today? Thank you.

Milton Filho (CEO)

Thank you, Bernardo. Thank you for your participation in our call. Let me start by saying by having a strong discipline of not anticipating the guidance for 2026, because we are building the numbers in an advanced phase, I would say, but there are still some stages that we need to do. Directionally speaking, we have found opportunities to grow. I think that regardless of the scenario, as you have said, it has its challenges. The challenges are more because of the uncertainty, and not so much the uncertainty. It is difficult to have absolute convictions in an uncertain scenario. A few elements that are important. First, opportunities. They exist. We will continue to strengthen our franchises in all the segments that we want to grow with quality in a long term vision. With the portfolio management.

Our capacity of reaction today, it's much larger than it was before. We are going to get into 2026. I can guarantee that with a balance that is extremely robust, very well, very well provisioned and with strength and capacity, solid capital base and with an inertia that is very favorable, that really helps. Our capacity to react, regardless of the scenario, whether if it's an adverse scenario or a scenario that is more positive, is enormous. This is important. This is key. Because evidently in the past with the legacy systems, you made a few credit decisions and risks and that took some time to get into production. Given the times of implementation, with all the modernization of the bank, the decisions are daily and the implementation is immediate. Every decision is done in the day.

We do not have to wait 24 hours for a decision, a reaction. The guidance will be based on the best information available at the moment that I present the guidance for you. Evidently, the guidance is not written in stone. We need to give great predictability for the market. We could be very predictable through the market and showing a lot of consistency in the guidance with a discipline of execution that I judge very well. The guidance is the best information of the guidance at the time of the publication. Depending on the year, and with more challenges, the reactions can be different than what was planned. We will let you know as soon as the information is available. We have discussed this with Itaú Unibanco. We are rethinking the businesses up ahead.

Businesses with a maturity level, with great maturity, but it is the strength of the all that gives us a lot of strength to quality, to grow with quality and capital discipline, bringing good results to the shareholders.

Operator (participant)

Thank you, Bernardo. Now we go to the second question that comes from Renato Meloni from Autonomous.

Renato Meloni (Equity Research Analyst)

Thank you for the opportunity. Congratulations on the results. I would like to talk about the segment of these small companies, specifically in the lines government. I wanted to understand how do you see the trajectory? Can you grow in the same level or are you gonna see some limitations whether if it is government risk? How do you see the trajectory of the NPLs as these are expiring?

Milton Filho (CEO)

Very good, Renato, thank you for the opportunity. Thank you for being with us. Thank you for the report.

All of us spent many, many hours reading our reports last night. We are very firm in the wholesale companies, in the retail. We have an important rhythm of growth with the governmental programs. We have grown with a lot of quality, good capital allocation and management, choosing the right client and the right way of growing within a value proposition that is unified. We could assume a role of leadership that is important since the inception of these programs. We have learned to manage these programs in an intelligent way. It is important. Of course, it depends on the program. We have heard a lot about the perennity of the program. It has a role that is very important, specifically in those clients of small size. We have the budget discussions.

Is it going to exist in the way that it was while there was the exchanges as we call it in the market. We seized the first loss because we had more space to leverage and then returned about BRL 100 billion to the market. It is a process that is very important and now it will depend a lot from the standpoint of the government with the allocation of resources and the lines. These are the most efficient allocations and it generates leverage. The multiplication multiplicator on the first loss is a high level, expressive level of clients in this program. Our operation, we need to have a capacity of growing with a segment always delivering the same product for the client. It is a governmental product. We are going to see, we are going to.

We're going to provide services for the client, the government, and also cross sell the flow, generating a good profitability level. Over the last years we've discussed this and we see space for growth looking up ahead, growing once again without letting go of the discipline of the capital allocation, the value creation, and also doing this at the right time and the right price. We still see good opportunities in the retail, and what I bring that is relevant, our Genai 100% powered platform, and we've gone through a process that is important by the evolution of this platform. We need to have a preponderant role in our strategy. We saw that this is an avenue of growth. We also were in an important process of evolution of the platform, learnings, improving, having an impeccable experience.

We are reaching a good maturity level in this platform. It has a new role in the strategy of the EU retail so we can service the clients 100% digital in a very efficacious, efficient way with mature models that have evolved with these clients. It will have a role that is preponderant in the retail from now on. We are going to talk about the evolutions all throughout the next quarters.

Operator (participant)

Now we go to the third question. We have Gustavo Shoden from Citi, please. The floor is yours.

Good morning everyone. Thank you for the opportunity and the time. Congratulations on the results and the consistency. It's impressive. I wanted to hear from you about the client margins. Let's just call it an accommodation vis a vis the dynamic that has happened. We had some effects of spreads that contributed negatively.

There is also the issue of Latin America. I wanted to understand if that's the level of how many mean with the that is reasonable with the client that we're going to work from now on. Or do you think that there is an issue that is specific for the third quarter to interrupt that trajectory of growth and maybe reaching stability. I wanted to understand the margin expanded so much. We've discussed a few points last year. We need to understand is there anything else more that we should get in terms of expansion or do we get to a level that is more stable with the client?

Milton Filho (CEO)

Great to see you, Gustavo. I'm going to give you two results. Two answers. First is in regards to the NII of this quarter. It's important to highlight a few issues in the last quarter.

You remember that we discussed that we have a strong NIM, very good expansion. The NIM itself has also a balance that is very important when we look at the effect of the second quarter to the third quarter, from the first to the second. This big jump, so to speak, has some explanations when we look at the third quarter. The first is that in the past quarter there was an increase, important increase in the financing in the world of credit cards. That generates a seasonality that is more of a conflict of a calendar than anything else. There was the effect that was favorable towards NIM and the NII of the last quarter. There is a second aspect. Given the level of profitability that we have today and the level of margin that we've reached, we have the expansion level.

We realize that a few operations are more apparent. The volatility is more perceived. In the first, in the last quarter we anticipated a few results of the wholesale structured operations that would have happened in the third and fourth quarter. That happened, that brought the NII to this threshold. There was an acceleration of the previous NII that would have been softer if it happened this quarter. There is a caps issue as well. The caps are important specifically in two portfolios, the INS portfolio and the Koregia. The check and given and the credit card also, the interest rates are higher, the liabilities are higher. This generates an effect in the caps operation. You pressure the margin when that happened. There is a fourth effect, and this is the last one, which is the flex one.

Flex is the way that we anticipate in a way. We discussed that in the margins with the client, there is the result of RAD, the REDE and the Flex. The result of MDR. The anticipation without the cost of funding will be with the revenue with services. In the past there is a certain logic because we separated this way. These operations were so relevant right at the beginning of the year. I'm going to bring you a few reviews of how we demonstrate to you in the MDNA, the managerial. The results of. We're going to do a few changes. I'm going to be giving you a few very transparently.

How are the changes and how is that compared with the year of 2025 adjusted so you do not lose the comparability base, the flex with the increase of the cost of funding and with the increase of the penetration cost of penetration of the product that generated a negative effect in the margin for this quarter. This is the structural debt is worth first, how do I see this? We need to see the annual base. This is the best way of looking at the NII and the evolution of the bank. We did a review upwards with a margin with clients at the beginning of the year. Then we changed the guidance. Now our best expectation is to work close to the center of the guidance until the end of the year. That means an expansion in the fourth quarter.

We can work close to the center of the guidance. That means that from the center of the guidance I am discussing a 12.5% growth, maybe a little less. It really depends on the performance in the fourth quarter. Still early to discuss, but it is something that we can expect. You can imagine that we are growing with the portfolios that are growing. The thresholds that we are growing, expanding our margin in over 12%, simplifying year on year. You can have a good idea of the strength of the growth of the margin. Looking at the relatives, the NIM, which is the central point of your question, we imagine a certain stability from now on. We did an expansion that is important and the NIM grows. The NIM that I really like to follow up is the adjusted NIM to the risk generating NIM is not difficult.

Depending on the quality that you grow with, product that you grow, and the mix that you grow. But a great deal of this growth you return with PDD. That's why we have a good expansion throughout this quarter. The adjustment of the quarter was 10 basis points in Brazil, 20. The last quarter was outside of the curve. We have a natural trend now, and we should work with this level of margin, specifically adjusted to the risk looking up ahead. This is a structural of the bank and working to expand the NII. As we grow the bank, the portfolios, the businesses, and with a balanced portfolio and with a drop in the interest rates, we always bring that slide that we show that our sensitivity to the CDI is much less than some analysts think.

In the end we have a structural drop in the interest rates, our capacity of balancing and growing in the other lines that balance from the interest rate, it rebalances the game. We have the expansion and next year without one interest, anticipate the guidance. We're going to see the NII all throughout the year expanding. For a NIM that is more stable with the volatility within what is reasonable. It's not a straight line. There is some volatility expected, but within a threshold that is expected with what we've observed.

Operator (participant)

Thank you, Sherodden. Now the question of Marcelo Mizrahi from Bradesco BPI.

Marcelo Mizrahi (Head of Latam Banks and Financials Equity Research)

Everyone, thank you for the opportunity. Congratulations on the results. Very solid. I guess the question goes along the way of capital, an organic generation of capital very positive in the quarter with an equity 13.5%. The question of last year, the threshold that the bank was after the profit sharing was 12.3. When we look at the perspective of growth from now on, and we have the other challenges I wanted you to discuss and you always discuss that threshold of 11 and a half and 12, which would be the level that you are feeling comfortable keeping that threshold. How would this threshold be now that we will be the NII of the bank that we would keep after the dividend distribution, the payouts.

Gabriel Moura (CFO)

Thank you, Marcelo. Thank you for the opportunity. Thank you for the initial words. The central point of the capital is to reinforce a few points for you. First, our policy for the profit sharing, the payout, did not change. We are faithful to our policy.

Of course there is some subjectivity because there is a lot of analysis that we do before the decision making process of how much dividend will be distributed. Of course we are only reinforcing. We work with the risk appetite at the threshold at the level of the board with the appetite of not working with less than 11.5% with CET1. This is what is defined at the board of the bank. We from the board we work with the buffer of a half, half a percent. So we will go to 12% because we never want to work close to the minimum.

Because you know in those situations you run the risk of losing good opportunities of growing, investing, making decisions that at that time can consume capital in a more accelerated way, regardless of the capacity that is very strong of the bank of generating capital. If you look, and we discussed in the presentation, this quarter we got 0.8 of CET1 before the provision of the repurchasing of shares and the profit sharing. What do I see up ahead? Our objective is not retaining the excess of capital, but we do not have an objective of dividends. We have an objective of capital allocation. With the discipline of allocation, the expectation of creation of value, and making decisions on the long term, always strengthening and always growing the organization. We are looking at the future.

We are seeing what is the budget, our capacity of growth, the credit risk, the market risk, the operational risk. Reminding you that at the beginning of this year we have the phase-in of operational risk, Basel III and credit risk in a few operations that are structured in the wholesale world. We got the first quarter paying 45 basis points of capital because of regulatory issues changes. There is another three years. This phase-in is 2028. There are three installments without interest rates of paying these effects. Of course we take that into consideration for the plan. We look at the capacity of growth, the capacity of capital allocation in a profitable way, the capacity of absorbing the regulatory effects, whatever they are. Within this projection we do the capital that is exceeding.

We will take a proposal for the board of directors. The board of directors will deliberate on the distribution of the dividends. As I told you, this is not a dividend that is extraordinary. It is a dividend that is additional, as this has been our recurrent dividend policy over the last years. We do not see any reason to do any changes in that policy in the way that it is designed today. In fact, the market will be informed through the communication protocols. We follow down the line the Brazilian SEC CPM protocol. We are compliant with the publication on the dividends and comments that we are compliant with all the marketing publishing norms.

Operator (participant)

Next question. Eduardo Rossman, the floor is yours.

Hi, good morning. Thank you for the opportunity.In the investor day, you discussed that you want to improve the efficiency of the bank. In a material way, the whole. The retail. You're gonna forego a few revenues to grow more. I wanted to know the opinion of Milton. Do you think that this movement is a defense or attack movement?

Milton Filho (CEO)

Hi, Rossman, great to see you. Thank you for the wonderful words. I read your report. Thank you for the quality and depth of the report that you just published yesterday. Let me tell you, at the beginning of the year, I discussed this, the presentation, and I would not bring you a clear vision of how our efficiency level is composed because we tend to oversimplify the vision of cost of DNDJ of the bank, of the expenses that do not stem from interest rates.

We simplify where we try to do comparisons with other players that are more specific in specific segments. First, the bank is a portfolio of businesses that is very relevant. Every one with a level of maturity at a different industry level. Some with strong investments, others with an efficiency agenda that is deeper and so on. It is important to understand the whole. Because of a number, we do not make precipitous conclusions, but our responsibility is to demonstrate this to you in the way that we publish. We break down the retail wholesale bank. You can see in the MDA that vision. The best breakdown is there. We need to be more precise, showing the strategic way up ahead. Gabriel has been the leader of an important work of efficiency in the bank.

Efficiency is something that we need to do every day. It is not a responsibility of the area of Gabriel in an isolated way or the commitment of a specific area. No, everybody in their own circumstances, everybody in the bank has to look every day and seek the efficiency level. The evolution that we have had throughout the time shows our discipline with the generation of top line and the control of costs. This will be evolving and we have better leverage. In the massified, it seems that it is more attack than defense, because it is not high income. In the high income you have an efficiency level that is higher than what we observe in the bank as a whole.

In an operation that has a cost of service that is different because the cost of serving the mid to high range clients is different than the platform that is 100% digital. The model of service can evolve. We understand that. Is the remote the on site. André was discussing at Itaú Day a bit about evolution. We want to get most of the clients remotely maybe over the next few years. We're going to continue to do this with a lot of investors. Itaú Day was with the idea of telling you what are the refreshers, how we are reviewing strategically the businesses looking ahead in the natural persons and the companies. I can tell you that we are in the execution model. We've started the execution of these projects that are very important for the future of the bank.

I am certain that this will generate a lot of value, not only because of the capacity of growing our portfolios, but we will go through a leverage that is more efficient for the segments where the cost of service is determinant for the sustainability of the business model. We see at the basis of the pyramid in the segments that are more massified that if we do not work with an efficiency level that is very low, to do this, we cannot do this in brute force. You need to do this with a lot of intelligence. You need to have the armamentarium, the technological platform structure so you can service your client with a lot of efficiency in these segments. The consequence naturally is to go to an operational leverage where the cost of service is much lower.

Therefore you need to be more competitive, specifically in the capacity of absorbing the cost of credit. When you have a high efficiency level, efficiency index, your margin post cost is very low to absorb the losses in a segment that tends to be more volatile. Evidently we will renounce a few segments when we do these decisions. Specifically those that are not resilient in cycles that are more acute. There is a high, a big important opportunity. Itaú branches, as we call it, agência, has had an evolution in the results that is very important. We have managed to converge this vision of top line and cost to have an operation that is more efficient.

If throughout the time we need to self disrupt a few things that we have done thus far and forego some revenue to accelerate the evolution of cost, but increasing the lifetime value of the clients committedly and serving the clients with the right value proposition, we will do so. This is the execution model that I mentioned. At the beginning of the year I will be able to give you some more color on that.

Operator (participant)

Thank you. Rossman. Next question. We have Daniel Vaz from Safra Bank. Floor is yours.

Daniel Vaz (Lead Equity Research Analyst)

Good morning. Thank you for the opportunity. A follow up on the question of mischief and the capital and dividends the year.

If we continue, consider the generation of capital in the fourth quarter and the adjustments that are based in January 1 of operational risk, it should be close to the 13.5 threshold of now tier one. We're getting to the end of the year and there are a few companies in the listed that are listed on the taxation of dividends. You know, there is the discussions of the shareholder of anticipating the payout. You can do a timing, anticipating the timing, and the excess capital can be serviced better. Given your excellence in the profitability and consequently the generation of the capital of the bank, it's the only thing that will generate a debate. How do you think about this issue? Would it make sense to anticipate the statement for the Brazilian IRS and to seize this opportunity? Thank you.

Milton Filho (CEO)

Thank you, Danielle. Thank you for the comments. Great to see you. In fact, you discussed a point that we know and we've been following this discussion of the legislative taxation changes, the payouts changes or issues being discussed. We're following very closely and of course we have a fiduciary profile that we see the changes in regulatory context changes. We will see the evolution should we have any relevant new facts. Certainly we will do our analysis, we will make our decisions and we will inform the market as soon as a decision is made by the board of directors of the bank. Let's follow this closely. The policy of dividends still there is still here.

We will fulfill our fiduciary duties and if there is any changes in the natural course of what we are used to doing because of any new facts, we will take it to the board and we will deliberate. Once it's deliberated, we will communicate to the market. We will follow very closely the regulatory evolution of the legislative changes.

Operator (participant)

Thank you, Daniel. Now the next question. Yuri Fernandes, JP Morgan.

Yuri Fernandes (Executive Director)

Hi, morning. Congratulations on the results. Thank you for the opportunity. We need to ask you about the growth of retail and getting into the investor day theme. You discussed there that you expected that the retail portfolio can double over the next five years. We see a growth that is timid, 1% quarter-quarter. It is a timid growth that has a lot of nuances. If we look at in the class personally that credit cards are growing well, some segments of consumer finance that are growing well and some lines such as insurance kind of weaker. Milton, when should we see an acceleration in the portfolio of retail? I know it's not immediate. There is the issue of doubling. We're not going to see the portfolio that get into what is implied. If you can comment on growth for retail, that would be great. Thank you.

Milton Filho (CEO)

Great to see you once again. Thank you for the question. We still are firm. Our purpose and ambition in retail and individuals and the companies. I told you that is an aspiration. It's not a guidance. It's an aspiration that is present the ambition of growing.

We have a lot of opportunities for growth specifically for the more resilient publics where we have the growth and quality. That is why we open the numbers of UniClass and Personalité, so you can have a vision of how we grew strongly in the high income, the de-risking in the portfolios that are less resilient. A great deal of it was concluded and now what we have is more of a dynamic that is natural of making choices. Where do we grow and where do we reduce? This is of the nature of credit itself. You are choosing credit, you are choosing where you are going to grow with quality and which segment. Do you see more concerns or signs of warning that you can reduce in the aggregate? There are still opportunities for growth in the retail, both individuals and companies.

We will translate that into numbers once we bring to the guidance and the overview up ahead. We are very excited with the evolution. It's evident that there is a scenario of more uncertainties next year. We're never going to get the ambition aspiration before a good risk management and capital allocation. We have a tradition of good navigation sailing through turbulent waters if they come up. Our portfolio has never been so resilient to face all the challenges. Once the opportunities are clear and we understand that they are, we're going to grow with quality in these segments. A lot of spaces to be occupied. All the migration of Juanitao brings relationships that are closer, you know, the clients that before we only had a superficial relationship. All that dynamic shows the size of the opportunity.

I am optimistic, really. I followed very closely the evolution of the individuals and the companies in retail and very excited about the future. I think that here we have results that are important and that will be harvested in all dimensions in time. I rather deliver than over promise. I am optimistic. There is a risk of execution, there is circumstances, there is a macro scenario. Let's follow how we evolve. Evolve with the interest rates, inflation, you know, unemployment rates. Everything influences the decision making process for risk. An important information. If everything is constant, probably we would have worked with a cost of credit that was lower than the cost of credit that we're going to close the year throughout the year. It is natural with our model you see the indicators PB and LGB of your clients.

You have forward looking for the macro scenario. This is B. This is part of our models for credit concession. We are recalibrating these models through the year. It brings more provisioning in regards to what is imagined over the beginning of the year. We reinforced specific cases where we thought that it would make sense. We were never so well provisioned. Delivering possibly the center of the guidance, our best expectation with the cost of credit. We will deliver indicators of credit with a lot of quality, reinforcing the provisions as the models are, as the forward looking specifically for the macro is adjusted. We are going to turn the year ready to occupy the space that we need to occupy. It is exciting. What is up ahead. Again, it is a race. It is not a 100 meter dash, it is a marathon.

Do not wait for a kicker of 15.8. If you've done the math for 2030, this is not what we're discussing, but the trend is very positive.

Operator (participant)

Now the next question. Eduardo Niccio, Daniel,

ood morning. Gustavo, Milton, congratulations on the result. I have a follow-up of Rossman in regards to efficiency in the mass effect. The mass that after the neobanks, it became a segment that is very challenging. I wanted to understand what motivated Itaú to get into the segment in a more aggressive way. Now in attack mode, was it the younger target audience? What do you see that is different now from a few years back that, you know, saying no to that segment was more obvious? Now, also continuing the efficiency, as you said, you have the smallest level of the banks. Can you improve that level?

You're getting into a journey of cost cutting, so to speak. Can you get to a level of 30%? How long it would take and how does that discuss. How do you. How can you work with a massified journey that is challenging.

Milton Filho (CEO)

Thank you for the initial words. Great to see you once again. Look, I'm going to try and rephrase your question because I think it needs context. We never renounced effectively a segment of low income. We always found two mechanisms to service these clients in different formats from what we see today. In the past, how do we service this public? Through the partnerships with the retailers we've grown because here there is a value proposition that is adequate with a cost of service that is adequate and a risk that is palatable to be assumed and sustainable throughout time.

We have a volume that is relevant of clients that are considered massified. Specifically when you recalibrate the incomes within our portfolio, it's millions and millions of clients that are serviced by the bank but could be better serviced whether from the standpoint of experience in the digital channels with the super app or credit. So we service these clients, we have a relationship with these clients when we stratify by income. I always say that there are clients that are massified that are targeted for the bank because they are stable, they are resilient in cycles. There are several profiles or personas in this public that are very resilient and these are clients that we really focus. The retirees, for example, of INSS, they can have lower incomes but it's a very stable product public for the long term.

Our INSS portfolio is one of the biggest in the market. This is one example. It shows that there was a process of digitalization that was relevant for the clients through the years. The new technology allows us to service these clients in a different way with things that we could not do in the past. Now the scalability is not given by the volume and the capacity of processing of the mainframes. It is given more by having a high-tech technology that has a cost of service that is very low. If that evolved and many of these clients were digitalized, there is a way of servicing these clients differently in a more sustainable way. If I advance in the efficiency level and I improve it, my space for absorbing the losses of credit increases.

I can service clients that are not target. Because the targets are very well, even the targets I can increase my exposure. Then on targets with time, given the cost of service, they are going to be target. These are clients that can be relationship of the bank. I have a universe of being serviced larger as I can service better, with a better experience, more fluid and a cost of service that is much lower. The clients that are massive high, the lower income publics. This is our vision. To do so you need to advance, you need to have the digital transformation. Since we invested a long time with the platformization of the bank, creation of technological modules, the super app that is an embryo of it all.

Now we have the way of servicing these clients in a very efficient way with leverage, operational leverage that is different. Your firepower, your capacity of competing in price changes. When we see the client in a digital channel with a product that is 100% digitalized, I bring the cost of everything ready for this specific. I am competitive and I service the clients through the financing companies. I think that we can have a more full bank relationship with these banks than mono product. Now I have a full bank to deliver, but in a different way, totally digital, cost of service much lower and much more scalable in the long term. This is our vision of the segment. There is a job to be done. We're going to increase our efficiency level of retail.

Of course, the efficiency level of the bank depends on the capacity of growth of top line, that binomial of revenue and cost. We still see good opportunities in a direction. There is still space for us to evolve. Most importantly, looking at the whole is looking at the parts. There are segments where we are benchmark, global benchmark for the efficiency level. For the payroll loans, it is already, you know, we have an efficiency level that is first tier. Are we saying that this is—no, this is not enough. This is not it. We are going to advance more in other segments, then we are going to advance in the whole. The relative of the specifics are going to be much higher than the whole because of the contributions of all the segments.

Operator (participant)

Thank you. For the next question we are going to switch to English as we have. Carlos Gomez-Lopez from HSBC. Carlos, thank you for your question. Please go ahead.

Carlos Gomez-Lopez (Head of Latam Financial Institutions)

Thank you, Milton. Thank you, Gustavo. Thank you as always for the consistency in the results. You make our work very easy. I have a question about taxes. We have a situation in which because of the high IOC, many of the banks are reporting very low effective tax rates. Actually, Itaú is the honorable exception. On top of that, we are going to have the accelerated amortization of the deferred tax assessment starting next year. Are you concerned that at some point there could be a public policy reaction and try to increase, increase even more the taxation that the banks have in order to increase the cash revenues that they can get from the banking sector? Thank you.

Milton Filho (CEO)

Thank you, Carlos. Good to see you. I will start with thank you for the compliments. Thank you. We take that very seriously. I will first start talking about your second aspect of your question, which is if we expect to have any change or any increase in taxations for the banks. No, we do not. Of course there is an important discussion today. If there are some asymmetries, fiscal asymmetries between banks and companies, then did not do exactly the same thing. If there is any change for payment institutions, we have Hedgehog. If there is for financial companies, non-banking financial companies, we have our vehicles. On a marginal basis we might see if there is any change in regulation, but not in a very consolidated basis due to the level of taxes that we pay today. We do not expect any major change.

We might see smaller changes, but in aggregated view we will not see relevant impacts in our corporate tax rate. We do not expect that for two reasons. First of all is the segment in Brazil that mostly has the most relevant corporate tax. When we compare ourselves to any other economy around the globe, you will see that Brazil is different from the other ones. We have 45% of corporate taxes, and it is very relevant. The government knows that. I heard the Minister of Finance say more than once that he knows that the level of taxation of the industry is very high. I do not expect major changes. Talking about the tax, the effective rate. Let me jump in, Gabriel, if you can talk a little bit about our figures, I think it would be nice to share.

Gabriel Moura (CFO)

Hi Carlos, thank you for your question. As Milton mentioned, the effective tax rate that we had at the beginning of the year and we mentioned that was around 31.5% and we mentioned that it would converge to the guidance that we have for the year. That is the expectation that you have. As you mentioned, the major effect towards the marginal rate that we have in Brazil of 45% to the effective tax rate that we see, it is the interest on capital and also some geographies of how the result is among all the different companies that we have. Those are the two major effects. At the end of the day, we are going through the guidance that we had before and we are converging to that.

Operator (participant)

Next question, we have Antonio Ruette from Bank of America, please, the floor is yours.

Antonio Ruette (Equity Research Analyst)

Thank you for your time. Congratulations on the predictability. I wanted to explore a theme that we've discussed with the acquiring business. It was very important because of the pressure of the NIM. What I want to ask you is we see the volumes growing in double digits, certainly is above any player, indicating market share that is increasing sequentially for some time. What I wanted to understand is what are the main drivers? Where are you growing? What are the segments and, more important, how can you earn this market share in acquirence? Do you have an influence of EBITDA webps or is it too soon to tell?

Milton Filho (CEO)

Hi Antonio, great to see you. You discussed a point that is very relevant. Consistency. The predictability for us has a big value in the way that we see the future.

We project our results and we try to control the levers discussing acquiring business. I mean, the result of this was an integration that was very well done in our company business. We closed the capital of REDE in 2012. Thirteen years later, it's longer than the integration. We can see the results of an operation that is very integrated in the bank. There is a specific segment. No, we've grown in the wholesale and the retail. We see share in both. What is the strategy? The strategy is the bundle to be able to service the client in the best way possible. Not with a vision product, but with a flow payment and receivable. And REDE is part of the value proposition. For us to stop seeing REDE as an independent business or a specific product where the price has to be done isolatedly.

Now, regardless of this comment, we are very disciplined to look at the vision of the client and to take care of not renting market share. As you know, I was the CEO of REDE 2013, 2014, 2015 and we know that a great deal of the invoicing that really moves the point of the share is concentrated in the big client. So it's not difficult to be more aggressive in the pricing. Pricing below your minimum price of exchange and then you have a marginal cost that is negative. And then renting market share that's not sustainable because in the first renewal of the contract, you're going to have to review the price and the market share goes away. Market share. We're very disciplined in price allocation of risk. It's not a business, well, it depends on the segment. You have risk of chargeback higher, lower.

We evaluate the business models. Certainly we take part on the chains that are sustainable. We have a strong discipline. All the PLD selling is important for the management of our business and we've managed with a value proposition and quality of service, speed of service, speed of SLA that we have with the clients. We service a great deal of the clients in Dzero. We have quicker credit card machines, higher approval rates and we look at the ecosystem of credit cards. We understand the flow of receivables of the client with a lot of speed. We can do a value proposition that transcends the machine. It is a set of things. It is a relationship manager that has training to discuss any issue, including really with property in the past that was restricted to specialists with.

As time goes by, everybody can talk about this and this gives you scalability and the capacity of servicing your client better. The journey and the experience has an important role. We see important evolutions in the MPS because it's not an issue just of being competitive. The prices are variable, but what the tenant needs is selling, selling quickly, selling with quality. When there is a problem receiving the credit card machine at the speed that they need to not lose invoicing. Half an hour without invoicing is much more costly than an increment in the rate. They are willing to pay for the right price if they understand that they have the adequate level of service. This is the work that the legal team has worked with the REDE.

The amps has an integrated with a solution for the smaller, you know, but it does not really move the needle in terms of invoicing. Regardless of the high engagement of their clients with the product and of the high volume of invoicing, it is still very relevant. It is not relevant for the invoicing or market share. Certainly it will be an important lever for the repositioning of the companies. Bu that platform that is completely integrated.

Operator (participant)

Thank you. Now the last question.

Thank you. Congratulations on the results. 23 of LOE is brilliant. My question is about the soft guidance for 2030. We have discussed these very strong numbers and to deliver Itaú should start now, next year. My question is, how is your mind for the year 2026? Imagine that Itaú delivers something 7%-8% of growth of portfolio. Do you see a possibility of that growth of portfolio being double? Considering a credit cycle that is better. How is your mind for 2026?

Milton Filho (CEO)

Hi, Andreke. Thank you for the initial words. We're very, very happy with the profitability level. Given the capital base of the bank. This has an important effect. We are very happy. We closed with the ROI in Brazil and this is very comparable that we see in the industry as a whole. We are very excited. Once again we have all the challenges up ahead. A lot of humility, foot on the ground. The past result is not a guarantee of the future past. These cannot generate a future accommodation. This is our motorway in the bank about 2026. I'm going to do a few remarks that are important and our responsibility is to communicate just better.

I'm not transferring this responsibility to anybody. It's mine above all. What we discussed in Itaú today is more aspirational than soft guidance. It's important to do this, to record this, because every conversation that we're going to have, everybody is going to look at doubling the portfolio in 2030. Every time that you do a strategic review of a business, regardless of the business, you have an ambition, you set the bar and you say, if everything goes perfectly, as I would love to, and the price to perfection happens, I'm going to get to this. Can we do it? The levers exist, yes, but it depends on a plethora of circumstances. The capacity of execution of plan, value proposition change. Everything has to be perfect. That's the first point, the first statement. The second statement is telling you the following.

We're still not going to anticipate the growth in portfolio, but specifically in a year such as 2026 with uncertainties, I can guarantee that we're not going to show you a portfolio that is growing 15%, which is double what we should grow. This is important to register ex ante. We need to see the breakdown of the segments and these can change. Imagine a year such as 2026 with a lot of uncertainty, election, you can have more volatility. The central bank can start the cycle of adjustments of monetary policy, but it depends on circumstances that are outside of the central bank. Depends on the fiscal, on the expansion of expenditure, on the perception of risk of Brazil, the cost of capital at the end of the day of Brazil. There are an X amount of variables depending on the external scenario.

Many variables that are very difficult. I'm not even saying that it's going to be scenario A or B. I'm just going to say that the uncertainty for 2026 is higher than it was the uncertainty for 2025. It's a normal point for every country that goes through an election process such as the next one. That means do not wait for the guidance of a growth of 15%. Do not do the math of the CAGR 15.8% to get the 50%. One I can tell you is that the strategy is fitting in too. We are very trusting in our capacity for generation of value in the retail. The plan is on track, no route deviations. Next year is an inflection point. We're going to get the low hanging fruits by everything that we've seen.

It is us in our circumstances. We are going to do this with safety, baby steps. This is a long-term plan. If we get to the future and we do not double the portfolio because the circumstances did not allow us, we are not going to suffer. Of course, we would love to do that, but we are not going to guide the ship with the information that we have. The armamentario for the management is solid, and we are not going to forego very relevant issues such as risk management and capital allocation. We are going to use these instruments, which are paramount for the way that we pilot the bank. Directionally, it will evolve. The results are starting to be perceived, and I can see that we are going to have.

I'm certain that we're going to share a nice story with you and I'm generating an expectation. Do not expect 15% of the growth of portfolio otherwise they're going to get frustrated. We're never going to over promise and we're never going to bring numbers that are beyond our capacity. Now the central point I go back to my answer of the first question. If there is an opportunity of next year showing that it's a benign scenario, where is risk on then we will accelerate with speed because our capacity of reaction, capital balance, liquidity, business models, and the team, highly balanced. Our capacity of turning the key is instantaneous. We do not take more than 24 hours to make a decision and implement them in the bank. This is very important and this will make a difference more and more from now on.

Gustavo Rodrigues (Investor Relations Officer)

Thank you, Navarro. Thank you to all of you that took part of our earnings. We finished the Q and A and our conference call of the third quarter of 2025. Thank you very much. Thank you, Milton. Thank you, Gabriel. I will give the floor to Milton to close the session.

Milton Filho (CEO)

Thank you. I would like to thank you for your presence. Thank you to my friend Gabriel, CFO of the bank, Gustavo, the IR director.

It's a privilege to have you with me in this discussion with the market and to tell you that we are very satisfied with the evolution and maybe going back to the original point at the beginning of the call, I will tell you at the end of my presentation that the numbers, at the end of the day, they're a consequence of a work that is done with a lot of dedication, a lot of energy, with a lot of capacity and a deep knowledge of our operations of business, with a lot of will to continue to grow and evolve, but above all with a lot of humility. We are certain that the results are solid, that the return is strong, but we are aware of the challenges up ahead. In no way I want you to have a feeling that we are getting accommodated.

We in the bank, we always, every day want to do the best thing and we want to enchant the clients and have the obsession by the client getting into this era of the hyper personalization that is perfect to make decisions that were important in the past and that are being very assertive in the result in regards to the results that are being delivered. Our capacity of competing in every niche, in every market, in every segment was never so strong. We are very excited with the opportunities in the future. Foot on the ground. Capital allocation, creation of value, efficiency, the execution model, constant and above all, a long term view. We will never let the future go. Taking short term decisions so that the results of the next quarter are a bit better than the expectation. No, we think that corrections need to be structural.

We do not want the action. Doesn't the action, the shares go up with the consistency and quality. Thank you very much for your role. The investors, analysts that bring feedback, that talk to us every day and that ask difficult questions, you have the provocations and that makes us improve. We don't know everything, it's in our culture. Thank you once again, and I hope that we have the next quarter. See you next time.