Banco Bradesco Q2 2023 Earnings Call Transcript

Quartr
Provided by Quartr
August 4, 2023

There are 7 speakers on the call.

Operator

Thank you very much for your participation. In the opening part of the event, our President Otavio will present the bank's results. Then We will have the question and answer session. The presentation and other materials are available for download on our Investor Relations website. If you want to ask a question, you can send your question via email or through a WhatsApp message Using the address and telephone number on the screen, the presentation will be in Portuguese with simultaneous interpreting into English.

Operator

Audio language can be selected directly from the window you're watching. You can also choose audio always in Portuguese, Even when questions are asked in English, I now turn the floor to Otavio who will begin our presentation of results. We will meet again later in the Q and A session. See you soon. Income for the Q2 of 2023 was €4,500,000,000 a rise of 5.6% versus the previous within our expectations.

Operator

As we've stated over the past few quarters, the recovery process will be Full constitution of IFC. At half year end The bank's performance is pressured by credit provisions and a good pipeline in the wholesale bank for the second half. This transaction will continue over the coming quarters spending to other credit lines as well as In the results and income, we see strong momentum for the insurance business, contributing positively to the group's performance this year with a We continue with our strategic and efficiency initiatives, the key ones being the reduction of the cost to serve in retail, strengthening our high income operation and the bank's digital transformation. Our primary focus is on serving our 72,000,000 clients even better, placing them at the center of everything we do. Our work centered on providing excellent service to our clients is geared What's contributing to their achievements, we have evolved and customized the journey's processes and products This is according to demand, the need and desires of our clients.

Operator

We felt the recognition of our over 38,000,000 account holders to significant progress seen in the quarters. 2 significant progress seen in the NPS for individual retail and prime in a variety of projects. We will continue to strive for constant improvement in an effort to delight our clients. Speaking of our digital agenda, Bradesco has always been noteworthy for its pioneering spirit in innovation. Our ecosystem Innovation links agile work methodologies, tools and collaboration with suppliers and startups.

Operator

I would also like to point out the partnerships with significant and renowned institutions throughout Brazil and abroad with which we have participated in a number of different projects in addition to the search for highly qualified professionals, particularly data scientists and in technology to join our staff. We are continually promoting the digital mindset and innovation culture across the bank This facilitates new business, scalability and personalization of services for clients. The accelerated use of the cloud coupled with emerging agile methodologies in Filas, has enabled a continuous reduction in the time scales for new implementations. BIA, the artificial intelligence application we pioneered, has had more than 2,000,000,000 client interactions since its introduction. In addition, we are exploring NPEs and new technologies such as generative AI and quantum computing, Open Finance, Real Digital at various stages of our clients' journey.

Operator

The clients' profile has rapidly evolved As they have become increasingly more digital each day. Nowadays, 73% of our clients have a digital behavior and 98 Percent of all transactions are performed through self-service channels. The volume of financial transactions on mobile devices has continued this trend and has grown by 33% year to date compared to 2022. As part of the efforts to optimize the cost to serve, Bradesco Expresso plays a very important role. There are more than 41,000 service points throughout the country offering convenience to our clients through a variable cost network.

Operator

In addition, we promoted the integration of NEXT with Bradesco. In this new context, NEXT clients will have Complete access to the discussed complete portfolio of products and services. DG continues as a separate digital bank focused on cards, payment accounts and partnerships. Still in the digital evolutions, we launched e Agro, an innovative digital platform for specialized services intended for rural producers that combines financial and non financial products and services in an effort to address all our clients' needs. This robust ecosystem features partners that carry the best offers to the market, covering the entire agro chain from financed for office and services and also helps rural farmers purchase, finance products and get credit or a 100 percent online.

Operator

We have witnessed a growth of 115% in this segment over the last for years. And we are the largest private bank operating in agribusiness, boasting unique and specialized services with 14 every business platforms that have dedicated teams, including agronomists. We have continued to improve our wealth services, a line of business that has been One of our top strategic priorities, our combined investment platforms which also include Our local banks in the United States and Europe have now received yet another addition. TVO Capital, the investment manager, established in partnership with Bivi. It has euros 42,000,000,000 under management and will continue to act independently and specialize in managing high value added structured funds in an open architecture format.

Operator

In order to expand our international offer, we launched My account in July. This is an international digital account for all the publics and includes a personalized debit card which can be used to make withdrawals and purchases in over 200 countries with automatic currency conversion. It a practical and tailored solution which joins the Bradesco Bank offer. Lastly, before presenting our financial performance, we would like to underline our position in sustainability, which permeates our strategy in our businesses. We have now reached 78% of our goal to allocate R250,000,000,000 to sustainable businesses by 2025.

Operator

And we also remain committed to creating operations and products with a positive social and environmental impact, posting growth, for example, up 72% in financing for the purchase of Solar panels and 168 percent in financing of hybrid and electric vehicles over the last 2 years. Over the course of the last 6 months, we received a number of different recognitions such as the inclusion of the funds managed by Bradesco Asset as one of the most Profitable in the Valour Economical Fund Guide in partnership with Gettolio Vargas Foundation. And within our innovation ecosystem, major awards for payment initiator and Innovabra. Now let's take a look at the Vigorous for the 2nd quarter. Net income for the quarter was €4,500,000,000 improving 5.6%.

Operator

Income from insurance posted the most relevant positive contribution for the quarter as a result of a solid operating performance and improvements in claims ratio. Market NII has been following the path of recovery that we had predicted, making a positive contribution. Client NIS had a negative impact as did credit provision. We'll show additional details on the upcoming slides. Now we're going to address our credit portfolio.

Operator

It grew 1.6% year on year and fell 1.2% This performance reflects the ongoing restricted demand in light of interest rate levels and the adjustments we made to our credit policies and portfolios mainly in higher risk segments like lower income individuals and micro and small companies. And individuals, we would like to grow and small companies. And individuals, we would like to point out the growth in real estate financing, mortgage and cards concentrated in high income. For corporate, we highlight farm loans. We have begun to gradually increase origination in some segments this And we intend to continue to do so over the second half of the year assuming that the vintages maintain the positive performance we have witnessed today.

Operator

As for guidance, considering the dynamics up to now, we opted to revise the growth indication which now ranges from 1% to 5%.

Speaker 1

As we mentioned before, The new vintages have demonstrated an improved performance. The level of delay over 30 days, 4 months after granting credits, the so called MOB4 is now almost 50% better than it was in December 2021. This has helped to contain NPLs and has allowed

Operator

us

Speaker 1

to expand origination in some products and segments. Credits originated from 2022 onwards, when we started adjusting our credit policies, now represent 53% of the portfolio and are, for the most part, a profile of lower

Operator

risk. For example,

Speaker 1

secured loans represents 68% of new vintages for individuals. We saw €10,300,000,000 in credit provision expenses over the quarter, representing a cost of risk of 4.8%. In this 1st 6 months, the actual is 52%. 52% of what I had indicated in the center of the guidance, which ranges from R36,500,000,000 to R39,500,000,000. We believe that the guidance remains valid, although the annualized value points to the upper portion at this time.

Speaker 1

Still on credit provision, the balance reached R3.2 billion representing 9.6 percent of the credit portfolio. Over the quarter, we once again posted a lower level of credit provision expenses under IFRS 9, which reflects expected losses. NPL creation over the quarter came to R11.6 billion, excluding the specific client effect. The still high level reflects the performance of older vintages. When we analyze The Q2 of 2023, and that's why we break it down by months, we see some stability in these indicators.

Speaker 1

We emphasize the coverage including 100% provisions credits, which is now 244%. Exceptionally this quarter, we present the monthly delinquent delinquency as this provides a clearer view of the syndication's Stabilizing trend. The short term NPL segment showed some improvement in all segments. And in the graph For the over 90 day ratio, it is now possible to see the inflection of the curves even with the unfavorable denominator effect caused by the shrinking of credit portfolio. I would also like to highlight the disclosure of our NPL ratios without the impact of that specific line.

Speaker 1

Now on net interest income, the total NII was €16,600,000,000 in this quarter. Market NII posted a new evolution compared to the previous quarter. And this line will continue to gradually improve With the recovery of the bank's ALM, client NII dropped 1.7% on an annual basis, reflecting the reduced volume and the 20 bps fall in the spread, which stood at 9.7 percent due to the lower risk origination mix. We have revised our projections for total O NII, considering the trend we see for the rest of the year, the new guidance range includes growth between 2% 6 The fees line is a challenge for the entire market and it's no different for us. Cards income continued to perform well, driven by higher spending by our middle and high income clients, groups in which we have recently increased penetration.

Speaker 1

For asset management, we are also adjusting our products and client offers and are already seeing signs of improvement. The other lines continue to be pressured by regulatory issues and the market's momentum. And this quarter, we had significant revenues in capital market operations and we expect that these revenues Maybe even more relevant in the second half of the year. We closed the first 6 months below the guidance floor, but we expect an improvement over second half of the year. And so we have kept the expectation for this line with an indication more towards the floor of this projection.

Speaker 1

Costs grew 11% year to date. Personnel expenses rose by 7.6%, driven by the last year collective agreement. Administrative expenses expanded 4%. The biggest impact on costs, as we have been mentioning, comes from the Other expenses and revenues line due to the lowest comparison base in 2022. We continue with tight control and expenses, adjusting our operations, structures and the cost to serve to allow better results without team customer service.

Operator

If on

Speaker 1

the one hand, we've adjusted our guidance for credit growth and consequently for NII, On the other hand, we are improving the guidance for operating expenses and insurance income, as we'll discuss later. The guidance for expenses, which was from 9% to 13%, now ranges from 7% to 11%, reflecting our efficiency and control actions. In the Insurance Group, our performance continues to evolve. Net income for the quarter was R2.4 billion dollars an increase of around 30% in quarterly and annual comparisons. The premiums growth and the improvement in claims ratio allow for a strong evolution on the operational side.

Speaker 1

The performance of financial results was also positive. Income from operations is up 21.7% year to date. And given the scenario, we've revised the expectation for the year, which now ranges from 21% to 25 Finally, we'll talk about capital and IOC. Tier 1 capital ratio grew 34 bps to 12.9%, primarily benefited by the cumulative profit for the period. The provisioned amount Our interest on equity accumulated in the first half of the year posted a potential payout of 69% for the period.

Speaker 1

Our liquidity position also remains And before moving on to the Q and A session, I'd like to point out that the revisions we've made to our projections reflect the operating dynamics we've seen up to this point. We know that we have important challenges in translating our commitment into better results. And therefore, you can be sure that we are committed to delivering a better performance every quarter. Now we'll join Cassiano and Fereggi for the Q and A session. Thank you.

Operator

We will now begin the Q and A session. We have Otavio N. Cassiano, our CFO. We also have the President of the Insurance Group, Eva Guntijo connected through by voice. Of questions in English into Portuguese, the recording will be available on our Investor Relations website.

Operator

What have you, shall we begin? The first question from Yuri Fernandes with JPMorgan. Thank you, Fira, to Casa and Eva. The first place, I'd like to understand the trajectory of credit provisions For 2024, I think it's clear what Tadu mentioned in the presentation that it would be close to the top of the guidance. And there's a positive message in NPL.

Operator

So I'd like to check if this is your opinion indeed. But my question is for 2020

Speaker 2

4,

Operator

there is an expected loss. So as you grow origination, my doubt That is whether if the growth of new originations will not increase ALL or credit provision. So if we have a peak of NPL, like to understand the bank's vision or opinion for the next year in terms of the credit provision curve. And the second question regarding interest rates sensitivity. In the past, you would show sensitivity Every 100 bps of silica would be 1,400,000,000 and I didn't see this time.

Operator

Do you still measure the sensitivity of a reduction in the Soliq interest

Speaker 3

rates. Yuri,

Operator

As regards to provisions, it is a fact the loan book growth was smaller Because of a need to adjust for delinquency, the delinquency curves that you observed, Well, we broke it down month by month. So as to have transparency of the NPL curve. So there's a reduction in 15 to 90 days delinquency over 90 day NPL. It seems we reached a peak because in recent months, it's been stable. It's not increasing.

Operator

But still, in July, we started having new Loan originations, of course, very cautiously, particularly for middle to high income clients That gives us a good spread, a good margin. So we resumed these operations. We have an important pipeline in the wholesale bank, a very interesting pipeline for the second half of the year. And I believe that the country's economic conditions are signaling a good resumption in the second half and in twenty twenty four. Interest rate was reduced by 0.5% by the Brazilian Central Bank.

Operator

It seems to all of us that the drop And interest rate is a given. Perhaps more than we and the market initially expected. We were Backing 0.25, it seems that it's going to 50 points. Some people are talking about an even greater reduction. So the whole outlook seems to be more positive for the second half of twenty twenty three and also for 2024.

Operator

With all the reforms that are in the pipeline, everything that is being talked about in Brasilia with a good outlook for the country, GDP growth, etcetera. Now of course, as we have new operations, we will need to provision for those. That's all correct, but Lower provisions than the ones we have now linked to delinquency, particularly in the end of this cycle, Yuri. Because as you know, From D to E, G to F, etcetera, these skips are much greater. The percentages are a lot higher.

Operator

So we see reduction in credit provision that will happen. That is happening given the final cycle of this delinquency that we had. This will allow us to have New credit provisions for the new operations. So if we look at the credit provision in the quarter was €12,000,000,000 right, Feretti? JPY 12,000,000,000.

Operator

So we're talking about JPY 4,000,000,000 a month of credit provisions Sumit got to reach us to provisions given delays particularly the longer delays where the percentages are higher And therefore, we can ensure have new operations with a much lower credit provision because we have better rating and better scores for these clients. So the percentage and the level of provision will be a lot smaller. As regards to other question, about NII sensitivity. If I'm not mistaken, euros 900,000,000 for every 100 points. The sensitivity is €900,000,000 Super clear.

Operator

Thank you very much, and good luck with the results. Thank you, Yuri. Next question from Bernard Gutmann with XP. Good morning. Thank you for taking my two questions.

Operator

Number 1, About portfolio growth, the starting point in the Q1 was low, close to the low part of the guidance. So you would need to accelerate a lot to get close to the top of 5%. I'd like to understand how GM intend to accelerate this? Do you have a lower appetite and more risky lines? What about corporate?

Operator

Does it remain challenging? So where will the growth come from? Specifically in what line items? And my second question has to do with the tax reform and the risks of the change, the proposals that have been discussed. And what is your base Your base scenario particularly regarding IOC, I'd like to have your opinion on this theme and how you evaluate the risks.

Operator

Thank you, Bernardo, for the questions. It's a pleasure to have you with us. Indeed, growth seems to be challenging. And we wanted to be transparent and fair with you, so it didn't make sense to us to maintain a guidance of 6 0.5% to 9.5% with a 1.2% growth in our portfolio in the 1st 6 months. Given the whole outlook, the whole context that we talked about.

Operator

Nevertheless, we have observed and we have been seeing into new productions that we've been doing. Particularly, We've had portfolios with the best credit margins. We have 33,000,000 account holders, as we mentioned. In addition to all of the people who one way or another have a contact with the bank, more than 70,000,000 people. So there is room for us to grow the book, particularly in those operations that are more profitable with the highest spread.

Operator

And thus, we can accept a little more challenging delinquency. So in terms of individuals growth will come from these portfolios. Consumer credit, Payroll deductible loans, real estate financing as much as possible. So that's for individuals. Now for legal entities, migrants, small companies, although, are suffering the most and that's where we have the biggest delinquency challenges we showed in the chart.

Operator

But still, we have good clients there that we can operate with good Secured loans with bringing forward the receivables, so there's room to grow these portfolios as well. And in the whole sale bank, because of our strategic planning, we have a pipeline of the operations for the second half of the year. And we have a very robust pipeline for second half pipeline or Second half of the year for large corporates and legal entities. And we see more momentum in the operations. This was in July.

Operator

It's recent. But in July, we saw more momentum in fixed income and variable Income deals, we had some follow ons that were very successful, 2, 3, 4 times the book and with the price discount That was very small. So there is great expectations. Many IPOs, they were In the draw, well, they are now coming back. We know and you're right.

Operator

The Look, it's challenging. That's why we revised the guidance from 1 to 5. If we talk about the mid guidance, we are talking about 3. But we'll work to get at least the mid range of the guidance, but always with an expectation that we might have a higher demand for loan operations. Perhaps we can pursue more loans so that we can get to the top range the top of the range of the guidance.

Operator

Oh, and regarding IOC, Bernardo, we practically have nothing. We haven't got the tax written yet. We know about the challenges. We have spoken about this with the government. We have spoken to them about the impacts That will have on us, on the banks, but also on the market as a whole.

Operator

So there will be a lot of There will be a lot of meetings, committees will be formed so that we can Address this in an adequate way to maintain the levels of profitability and results for our shareholders. But it is a challenge because to date, we haven't got anything formalized. Nothing was formalized regarding IOC. And nothing was formally submitted regarding IOC. But Bernardo, you've probably observed this.

Operator

The contact with the government, the interactions with the government are very positive both with Roberto Campos in the Central Bank and Minister of Finance, Haddad. We are trying to find a solution that is adequate for revolving credit, interest rates. Even Minister Haddad yesterday The working group was formed with the participation of the Central Bank, the Ministry of Finance, Fibraben, The Federation of Banks to find another good solution that in 90 days, the solution there will not be a single solution because there's no easy solution for complex problems, but that within 90 days, they will present a solution that will at least address the situation of credit card interest rates, particularly This portfolio this credit card portfolio, everybody complains and talks about interest rates of 400 So this facilitated interaction with Brasilia is important so that we can have a high level discussion, High level interaction with them, this is what we've been observing. And I think that this will address this will bring about a good discussion. Points will be put on the table so that we can find the best solution showing the tax reform trying to maintain profitability and company's ability to grow.

Speaker 1

Thank you, Bernardo. So our next question, Tito Labarta, Goldman Sachs.

Speaker 4

Hi, good morning. Thank you for the call and taking my question. A couple of questions, I guess. Maybe one Starting on profitability, in the past, you've mentioned getting back to around an 18% ROE, maybe sometime end of next year. Just help us think about that potential evolution.

Speaker 4

What would need to happen to get back to that 18% ROE? And you're thinking about some of the headwinds that you're facing at the bank. You've talked a little bit about loan growth and credit quality, but just Do you think you'll be able to grow your loan book sufficiently enough asset quality, improve enough particularly in a scenario of lower rates where you can get back to that 18% ROE, is it still feasible to think end of next year? Or is it more Of a longer term target. So that will be my first question.

Speaker 4

And then my second question, thinking about the competitive dynamics, The lower income segment, because of credit quality issues and everything else, has suffered a bit more, and now you're going more into higher income segments. If you can help talk a little bit about how you see the different competitive dynamics and your advantages in between both lower income And as you shift a little bit more into higher income and some challenges that you could face there? Thank you.

Speaker 3

Thank you, Tito. Good morning. Thank you for your question.

Speaker 1

Tito, you're quite right, and I fully understand your question. Of course, We're not delivering the results we wish to deliver and as you would expect, But we have a very well defined path

Operator

for

Speaker 1

us to gradually resume seeking those results. I think a series of factors contribute to this belief, to this work that we do to Go back to having the results we had in the past. I think the market ALM The issue is absolutely solved in the Q3, already with positive results, Low but already positive and not negative as we had in 2022. And for 2024, the scenario is quite positive in terms of market ALM. As for credit, as you saw me answering earlier, we already have better Control of delinquency that have happened due to a series of factors, economic factors and situational issues of the type of Clients that we have, the profile of clients that are Bradesco clients and that combined to a much better Expectation that we see for the second half of the year and for 2024 as well.

Speaker 1

Regarding what the Brazilian We opened 2023 with economists talking about a GDP growth of 0.8 percent and now we're talking about 2, maybe 2.2 percent of GDP increase for 2023. And this will certainly carry a tail into 2024. 24 already indicates to have a better scenario. Interest rates, it's low. Yes, of course.

Speaker 1

It's From 3.75 to 3.25 is small, but it's the beginning of a reduction. And the reduction of interest rate Seems to be already a given. The drop on select rate is already agreed in a percentage that is higher than we expected From 25 bps to 50 bps, even higher maybe. So that also gives us very good expectations for the future, For what's going to unfold, the expectations we have for the year 2024 seems much better. So I think all of these variables combined give us the expectation that we will have A better second half of twenty twenty three and a year 2024 also better with lower delinquencies, Better growth of loan portfolios at a with quality with IPOs and follow ons already coming in And being able to increase revenues, the insurance company has been going through a good phase.

Speaker 1

In the second quarter, it made TRY 20 BRL 5,000,000,000 in the half year, it's already been BRL 50,000,000,000. So we're working hard to close the year with a Higher income above €100,000,000,000 Of course, it had benefited from the indices IGPM and IPCA, but what we see is the operating growth of Bradesco Seguros in all segments See the private pension plans that already has a positive uptake. The auto sector and Property and Casualty also improving in reduction of claims. Even health, with all the challenges, despite the challenges of service costs, We're able to bring new customers, new companies to our portfolio. So the insurance company also has very good expectations.

Speaker 1

We see a brand with relevant growth in their portfolio, with relevant growth in the funds under management. And they are ranked as one of the best asset managers from the end of last year, the beginning of this year. So looking at the whole macroeconomic scenario And the work we've been developing here at the bank,

Operator

we see

Speaker 1

we do see the possibility of us Going back to the results we had in the past, it will be gradual, yes, but we're working to make it happen, and it certainly will. So I think that's a little bit of what we expect for the second half of twenty twenty three and for the year twenty twenty four. As for the competitive scenario, especially on lower income, Tito, you know inflation is

Operator

A huge

Speaker 1

plague for the Brazilian population and it's the majority of our clients, the people who are 70% of Bradesco's clients. And at this point, these people are more affected in their purchasing capacity and the payment capacity, and that translates into delinquency as we see here clearly.

Speaker 3

But

Speaker 1

as the country starts to get a better condition for GDP growth, we're seeing unemployment at lower levels. So I believe that our competitive advantage and our comparative basis to continue Growth in this segment as well, despite all the competition, especially from digital banks that are competing with us and some of them did well. They're doing good work. And that's also important for the competitive scenario in Brazil. So I think we're well positioned to also grow in that market with product placement, Credit placement at the right rate and the right size of credit.

Speaker 1

So it is a competitive scenario. It's big, Quite large, but that we understand we're well positioned to compete. As for higher income, we At our last earnings conference call, I talked to you and we said that our high income vertical, As we also showed in today's presentation, we have total focus on a priority in the high income Vertical, when we put everything under Guilherme, taking care of high income and we combined Private, top tier, prime as well as our Agora brokerage, A digital high income that's also evolving quite well. Our bank in the United states, in Europe, we added capital, dollars 230,000,000,000 of capital in the United States to be able to grow on loan operations there as well. There's a lot of room for that.

Operator

And

Speaker 1

now we recently launched My account last month actually and my account also gives us expectations because everything is aligned under the same vertical, not to mention a brand Bradesco asset. That's also part of this process. So I think that this vertical with this quality, with this capacity that these business This have to evolve during 2023 2024, they'll be consolidating and bring better profitability. And now more recently, this week, yesterday or the day before, we were the winners and we'll be the partners For Amazon, here in Brazil, to issue their credit card, this will be officially launched on 8th, But they released the information yesterday. So Bradesco will be the issuer of Amazon cards here and they are a quality brand that is respected around the world.

Speaker 1

So I believe we have very good expectations when we look at what was done in terms of the market ALM, The better control of delinquency and the expectations for growth that we have for 2023 2024. Otavio, if I can add And lower income, it's important to mention, as you said in the presentation as well, NEXX, the work that we did with NEXX, To bring this to the bank, it's a synergy. We have 2 strong brands, Next and Bradesco, for this digital native Clients will start in their banking journal journey and that also contributes to access and competitiveness in the lower income market. So this strategy

Operator

is along

Speaker 1

with all the others that Otavio mentioned in our high income vertical and our repositioning that's focused and this customer centric and Principality. And that's very important. In Bradesco alone, we opened 15,000 accounts on mobile every day. So every day, we're talking here about 300,000 accounts. And NEXT is no different.

Speaker 1

On NEXT, we opened 4,000

Operator

accounts per

Speaker 1

day, 4,000,000 or 5,000,000 clients that we have that are active on NEXT that was incorporated into Bradesco and it does not have any more all the costs it did. And it now becomes An expression for our heavy digital user clients to have a digital bank to call theirs, Even if they don't have if they don't like Bradesco particularly, they have a digital bank available with all products and services that Bradesco can offer. But with that phase, with that feel, the journey that is of next. In addition to the Deutsche Bank that is a completely separate bank with very important partnerships. They work with partnerships in credit cards, payment accounts and they have a partnership with Uber.

Speaker 1

There's more than 1,000,000 clients that are Uber partners, Uber drivers who already have digital accounts. So this scenario shows you a little bit of our activities on low income as well. Our next question, Daniel Vas, Bridget Suisse. Daniel, you may go ahead, please. Sorry, my microphone was muted.

Speaker 1

Thank you, Ferencio. Good morning, Octavio, everyone. Thank you for this opportunity. I'd like to talk a little bit about asset quality. We saw here in the presentation that the new vintages already take 53% of the loan portfolio And individual concessions are already 58%.

Speaker 1

And we can say that there is a Level of a portfolio with a new risk profile, but NPL creation is stable at higher levels. So loss when we look at what was expected on IFRS for the portfolio increased. So I'd like to understand from you how to read these indicators Correctly, vis a vis expectation of portfolio increase, is it possible to increase the portfolio without these indicators rising Or at least remaining stable, what would be the new mix or new risk profile? Or if you must make any additional Correction on origination so that these indicators drop considering the portfolio increase you're aiming for next year. I'd like to explore this with you and if you can help us read this correctly.

Speaker 1

Hello, Daniel. Good morning. Thank you for your question. It's a pleasure to have you here with us. Indeed, you're right, but that's what I said.

Operator

At the

Speaker 1

end of this cycle, when you carry over More provision of that skipping of letters when it goes from 10 to 30 to 50 to 70 to 100, the provision volume end up higher here, although the credit provision volume for new operations is not as high because they are Operations that come at a better rating or score. So that balances our capacity to continue to grow, increasing our credit and accelerating as we expect and want to accelerate without having an increase on Credit provision expenses, we're running at 3.5 to 4 per month, but a majority of this The operations of the older vintages that are closing their formation cycle in the RGAAP. Now unexpected losses, that's the concept that we use. And that's why in every presentation we show this to you and this will be in force now in 2025 and January 20 So we're always looking at that and showing it to you through the expected loss concept because that's how we're able to better see it. So a better origination of a better portfolio with clients with better ratings and scores, As you already mentioned, already gives us a good dimension of the work that we're keen to do to increase our credit portfolio.

Operator

And on

Speaker 1

the other hand, it also benefits those operations who have bigger spreads. That means that can take a little bit more of delinquency, but on the other hand, bring

Speaker 3

credit

Speaker 1

higher credit revenues. So I think this balance that we're trying to achieve and implement over the second half The year end 2024 will allow us to get the portfolio to the credit portfolio to grow Because there will be a demand for credit, this seems pretty certain with the reduction of interest rates and Increase on the GDP and employment going down will allow us to grow our loan portfolio without increasing or maybe even reducing The credit provision expenses that we see for the year 2023 because it is still carrying over expenses with delinquency provisions of ALL. It's also worth mentioning that NPL formation has already given clear indications of stability in the Last quarter, we believe it will begin to drop. The NPL flow to formation also goes through this Negotiation process and renegotiation with a client that also delays the natural flow from those older vintages They have already given some indication of deterioration. So I believe this cycle is flowing.

Speaker 1

We believe that soon we'll be able to get better news information as well.

Operator

Thank you. Next question from Rafael Fraggi with Citigroup. Fradi, go ahead. I have two questions. 1, Building on the comment made by Feretti regarding renegotiation, I don't know maybe I overlooked this in the previous quarter.

Operator

But I believe that you negotiated very little in portfolios. There were Less than 90 days past due, but in this quarter, you mentioned almost 50% of the renegotiation came in the portfolio of less than 90 day past due. So I'd like to know when did this change happen? And please elaborate on the rationale for this change. How do you see this renegotiation that is somewhat earlier?

Operator

And the second question regarding the insurance operation, you posted a relevant improvement in the operation this quarter and in the guidance for the year. But I also noticed a reversal of provisions, specifically in the line item other provisions in life and pensions. So I'd like to know does this help explain the improvement? I'd like to understand this reduction in provisions and if this helps explain the improvement in the yearly guidance. And perhaps how this will be in 2024 because you're not going to have this kind of reversal.

Operator

Thank you, Rafael. Well, Rafael, recruiting the NPL that Feretti mentioned, We have always worked with the negotiation with clients. Comparatively, Can I recover? How much can I recover in that past due portfolio? Is it best to sell this portfolio because I can get a better price for it?

Operator

Jebu, remember that given the interest rates and the interest rates hike, single of portfolios became more and more difficult because the prices were no longer attractive. This indeed happened. And we did not sell a lot of portfolios because it didn't make business sense to us because we would get a better price if we renegotiated. And in credit recovery, you know, you can bring more money in and have better result. So indeed, we focus more on renegotiations, collecting from clients, particularly in loans that are not very much past due.

Operator

Because when it's long past due, we can renegotiate easier more easily. So the fact that we are now selling the portfolios because the prices were not attractive. And all along, we said that we would make a comparison between the advantages of selling the portfolio and what I can collect Internally, so this is a business that has to be profitable or else it does not make sense. And So we are focused more on recovering the loans from our clients and this is what led to this effect that you yourself mentioned. In addition to improving the modeling, predictive modeling to understand and identify The patients that have more ability to pay until we can recover their their loan.

Operator

And this is about NPL. Regarding the insurance company, Van Goghtisch, the CEO of the Insurance Group is here. Ivan, would you like to comment On Rafael's question? Rafael, thank you. Rafael, thank you for the question.

Operator

And based on your question, you mentioned the improvement of our guidance and the robust balance sheet of the insurance group. Before addressing directly your question, I would like To highlight and based on what you said, our sustainable growth, But a revenue that is noteworthy given the joint integrated Work of co management among the companies and the several departments of the insurance group. We are market leaders in insurance, pension plans and capitalization bonds. Through better result of our operations, very robust Sales, RMB51 1,000,000,000 BRL in the first half, a better claims Ratio, better mix of products with new products, more tailored to the regions, better process aiming to serve our clients better and particularly an improvement of our fundamentals. Focusing on the people also of the insurance group.

Operator

So to your question, in the Technical provision line item that you mentioned, well, these are formed in addition to the specific compared to results to face the future commitments of the insurance group, Always considering the economic assumptions and the actuarial assumptions reflecting the best estimate for the portfolios. To give you an idea, the behavior of IGPM influences this line item that you mentioned, This line item of provisions. We always form our provisions based on the best market practices and particularly considering IFRS 17 and the standards in effect. Bradesco Seguro's Wealth Insurance Group was established about 40 years ago and we are always focused on the sustainability of the business and aiming to better serve our clients and The perennial behavior of the insurance operation. So I'd like to draw your attention to the fact that in the end of July, the insurance group posted conference.

Operator

RMB 340,000,000,000 and I stress RMB 1,000,000,000 of provisions. So this gives us a lot of comfort and it gives us peace of mind to continue. In this past, Then the Bradesco organization decided to start about 40 years ago, and that will continue. Thank you, Fradim. Next question, by Mario Pierry with Bank of America.

Operator

Mario, please go ahead. Good morning, folks. Thank you for the opportunity. I have two questions. Number 1, Looking at the new guidance of expenses, it is implicit said that expenses will remain flat in the second half compared to the first half.

Operator

So any new measures taken by the bank to contain expenses? Where do you see this improvement in the guidance? 2nd question, I'd like you to elaborate because you mentioned that you're going to be issuing credit cards for Amazon. And I'd like to understand the economics of this product. If the credit risk is on you and if you could elaborate on that, it would be very appreciated.

Operator

Thank you. Good morning, Mario, and thank you for the first question. Well, the second question, I won't be able to elaborate a lot, but I'll tell you whatever I can. Regarding the guidance of expenses, I would like Cassiano to speak a little bit about this and then I'll add if necessary. Thank you, Mario, for the question.

Operator

Good morning. Well, the guidance of expenses, let's Remember what we have been systematically reporting to the market, it means a strong cost control of the organization and this continues. Expense lines, Both administrative expenses and personnel expenses, well, that's all under control because of the work that we've been doing. This has to do with our cost to serve So that we can have a good control of expenses even considering our collective labor agreement in September. Still, we have expenses under control.

Operator

Operating expenses, otherwise, are making some difference. But in the second half, They are coming down to the normal range. So we are convinced that when we change the guidance, We are right in the middle of the guidance to know and we'll know that our expenses are always under control. We don't see a lot of variation. We understand that we are on the right Path of maintaining expenses flat was stable in the second half of the year.

Operator

And Mario, let me add to what Of course. We are continuously making adjustments in our network of branches. You will see that it's not that we closed down branches, but we changed the branches. We Either we merged some that were very physically close or returned a conventional branch that has a lot more costs, Guard security, guards revolving doors etcetera, we turn them into a branch that has a lot less fixed costs and fixed expenses. Since last year, this work has been starting.

Operator

In 2021, 2022, we started doing that. In 2023, the second half, there is about 100 or 150 branches that will be transformed. We will continue on that path. There is also the progress of Bradesco Expresses with 41,000 points. So we can ensure our presence in the cities, But it's all based on variable cost.

Operator

So we don't have that problem of cost increase. If we have a cost increase, it's because we have a much higher additional revenue flowing in. So this gives us a lot of comfort, a lot of peace of mind to adapt the expense guidance and to say that Our expenses should be in the middle, a mid range of the guidance. And as for the Amazon card, Mario, you will forgive me, but we cannot say anything. But what I can tell you is that the credit risk is ours but with total autonomy of Odescal.

Operator

Now the other aspects of the business, people forgive me, but this will be launched on August 8 with the presence of the Amazon Board and our Bradesco people as well. The launch will be on August 8. And during that event, more details will be disclosed. I shouldn't be talking more about that. On 8th, we'll be able to speak more about this.

Operator

They will present all the economics. And if you want a meeting, Horje, the VP of cards can Meet with you, can give you all of the information as long or as soon as we have disclosed the business with Amazon, which is our partner in this business. They're wonderful partner. This is a wonderful partnership. We're very happy to have them as partners in Brazil for the issuance of cards.

Operator

And other than that, I cannot disclose anymore. Thank you very much.

Speaker 1

Thank you, Mario, for your questions. Next from Juan Ricaudi from Scotiabank. Okay. So we'll go

Operator

to the

Speaker 1

next question. And then if one reconnects, We'll go back to him. Next question, Thiago Batista, UBS. Thiago, please go ahead. Hello, guys.

Speaker 1

I have two questions. The first about Dizenghola. There's been 1 month of the program. I'd like to understand a little bit of the impacts that this 2nd phase of dizzying hollow will have on Bradesco if it's going to bleed to a drop of NPL or If you can give us a view of the impact you expect to see both in the bank and overall. And my second question also in terms of regulation.

Speaker 1

In July, we had that change in the risk factor. The bank has already improved since the Q4 of last year. But how do you see the impact of this capital regulation change? How much can it add? 50 bps, 100 The magnitude, if you can give us, after this new regulation.

Operator

Thiago, hello.

Speaker 1

It's a pleasure to have you here. About this in Holland, the operations are of low amounts. We're talking about the 2nd phase, Thiago, where the person still has to negotiate directly with their creditor, either the bank or the store, So what we've seen is that there has been an increase in renegotiation operations Of

Operator

that, which

Speaker 1

we already had around 8% to 9%, the daily volume of renegotiations, that's the first 12, 13 days that it since it started. In this first phase, there was an exclusion of 620,000 Default accounts of up to 100 BRL now for the client to normally pay for their operations so that they don't go back that much because these are operations that have already been written off. It doesn't really change Anything so much at this first time moment and in this scenario. But what we can see, Thiago, the people that we were trying to reach in order to collect, it was impossible and we couldn't. With This in Hola, at least they went there and clicked on the website, they showed up to try to see the conditions they have and then we were able to renegotiate get something back, but it's small.

Speaker 1

It doesn't really change NPL that much. As for capital base vessel, as you said, we have been improving. This quarter is a little bit better. And now we have Of this new legislation that started in July from the Central Bank, the impact will be from 0.20 to 30,000,000,000 to 30 bps, and it was implemented now on July 1. So the initial impact is that it will be from 20 to 30 BPS.

Speaker 1

Thank you, Thiago. Let's go back then to Juan Ricaldi

Speaker 2

with our conference. My question is related to the fees and commissions. I see how you reiterated the guidance of a growth of 2% to 6%. But in the first half, the change was year on year, the change was negative 0.5%. So I was wondering if you can talk about what will drive the stronger fee income in the second half, whether it's going to be card income, Asset management, checking accounts or any quarter on that would be helpful.

Speaker 3

Okay, Juan, thank you for your question. Good morning.

Speaker 1

So Juan, we're below the guidance in terms of fees, and this is a business that really struggles with regulation, Governmental decisions, the central bank's decisions, there's some asymmetry in that sense. And sometimes a lot of dissemination on social media for Fees to be canceled because there's the essential package by the Central Bank. So there's always a lot of offenders for us to grow. In order to grow in fees, there's no other way other than growing in volume, increasing client base, strongly increase the bank's client base. And that's what we've been doing.

Speaker 1

I talked to I mentioned briefly about the Grow in accounts open on mobile, even the accounts on Next, There's 4,000 accounts per day and in all these cases seeking to generate benefit to the client so that they see that the fee It's not just an expense that they have, but that the fee will bring them additional benefits. So they pay the fee, for example, to have a subscription of a streaming channel or maybe Disney Channel or Disney Plus and some partnerships that we're making to make this fee more attractive for the clients so that they can perceive not only the work behind and the Quality of the services provided by the bank, but also additional benefits to our clients so that we can retain them, and that's a good point. Bradesco Asset has been doing a good job increasing their portfolio and the assets managed there With new funds, with performance rates, the administration fees due to the reduction of interest rates in the past, Administration fees went down, but once interest rates went up, administration fees did not increase and they won't increase. So you need to work with other Funds that include a performance fee because that's how you can get additional revenue and Abraan has been developing good work in that sense with Credit funds that stand out in the market.

Speaker 1

So to summarize one, I tell you that we need to gain scale. We need to get more clients, more products and services to be able to add products and services that have a high perception of value for our customers and that's how we can think about fees. So it is a challenging guidance, but we understand that considering this greater volume, the grow on client base And fees that come from other areas in the bank, we understand it is possible for us to seek at least a lower level of the guidance In fee revenue, another important point that you mentioned earlier, Otavio, in the market in the capital market operations, we understand there is Strong attraction in that in the second half of the year and that has been contributing to our fee income. July was very good. We also need to look at high income and cards.

Speaker 1

Spend has also been working well. And Tivio, that's an association that we formed recently with Banco DO Brasil that adds that other work that you mentioned about Bram.

Operator

So it's all

Speaker 1

of these aspects, and we cannot forget an important point, one, which is credit. If the credits are retracted, the fee revenue also retracts.

Operator

And

Speaker 1

now to As Otavio said, now we'll be more comfortable to seek at least a lower level of the guidance. Thank you, Juan.

Speaker 2

Thank you for your comments. Thank you, Juan.

Operator

Now we have we still have a very long list of questions. So as much as possible, Please limit yourselves to just one question. Next question from Edward Rosman with BTG. Hello, good morning. Actually, I'd like to ask a follow-up question regarding the insurance company.

Operator

I believe the result was very solid. It surprised positively everyone. We were expecting weaker results, albeit with some improvement. It is it was not 100% clear to me because there was a big difference quarter on quarter. And that leap, is it the new bottom line However, the insurance group looking forward, could we expect more improvement?

Operator

I just would like to have A clear notion regarding that. Even can you answer Eduardo's question? Just to Confirm your previous answer regarding additional provisions as you mentioned. And then I will add something. Thank you, Atavio and thank you, Eduardo for the question.

Operator

Your question, Unlike Rafael's question, it's more geared to the future. And I would like to say that we changed our guidance from 21% to 25%. But we did it under a lot of thought. And this is based on the fact that in the first half, we achieved the mark of 21.5%. So it could be different for the second half.

Operator

For T. V. Leaf, we consider the improvement In the commercialization part, We made some changes in the commercial department of the insurance group in the beginning of this year. And this has started showing excellent fruit in the first half of the year. And our earnings clearly show that RMB 51,000,000,000 BRL, as I mentioned, but actually in the second half, we expect to reap the effects on the fruit of this Commercial operations, we will be working on the bank assurance in a differentiated fashion.

Operator

And we believe that in the second half, we're going to reap even more fruit in addition to increment of the commercial channel That now, we'll work together with the network channel, but Separately also with the strategy that we developed, this will happen in the ecosystem of each company. This was implemented in the first half and again we can see the positive effect and I will continue. This project, which we call Project Bravo, bringing the multichannel to the inside of the companies, driven improvement in performance and will make performance improve even further in the second half of the year. So businesses will evolve Given the sales to companies, Looking what we are thinking, we're considering a higher NII and it's continued in the second half. We will maintain the loss ratio, the claims ratio At this level or even lower and all of these are positive effects together with the product mix and expansion of the margin.

Operator

All of that gives us comfort. And now I address your question. This gives us comfort to increase the guidance. And it gives us the hope that we will achieve definitely, but for sure, even better results in the second half. I'm not sure I answered your question.

Operator

And Grossman, OME, just add to what Ivan said. The sales, the revenue of the Insurance Group will be greater than JPY 100,000,000,000. And this is the result of the work that the insurance group has been doing led by Yifan. I had an important reduction in the claims ratio and you know that every percentage Point of reduction in coins ratio is fundamental. There was a positive impact.

Operator

The IAGPM was negative and in the increase in sales. To give an idea, Eva did a work for the development of digital journeys and this year we'll have more than 2,000,000 items sent in mobile devices, just of insurance. So of course, our wish and we will work to continue to maintain this kind of revenue For the coming years, in the insurance company, because of this growth and because of the independence of each one of The fundamentals of the insurance group, if you look at our balance sheet, give us comfort to have a very objective prospective look of the future, very positive outlook for the future. Thank you, Rosemarie. Next question from Arnon Shirazi with Santander.

Operator

Arnon, Go ahead.

Speaker 3

Arnaud?

Operator

Arnaud, are you there? We do not hear you. Okay. So let's move to the next. Renato Meloni from Autonomous.

Operator

Unfortunately, the sound is not audible. We apologize. We apologize, but Renato Meloni's sound is not audible. I'm sorry, Henao, to We cannot hear you at all. Your voice was very metallic.

Operator

Renato, are you there? Okay. Let's go to Pedro Leduc, and we'll come back to Renato later, okay? Next question from Pedro Leduc with Itau. Thank you, Ferrietti.

Operator

Good morning, everyone. A quick question regarding the guidance review for NII. 7% to 11%, now 6% to 10%. Since this guidance was disclosed, the CDI curve moved in a favorable position regarding market NII and still this total line was reviewed down. I think it has to do with the portfolio.

Operator

So what do you expect regarding client NII? Because it seems that considering a drop in CDI, still you revised this down. It seems that there was and deterioration in client NIMs for the coming quarters. Is this a fair statement? And how will this evolve for 2024?

Operator

Okay. Pedro, thank you for the question. As we have been saying, the market NII, yes, It has that constant gradual growth towards the second half and the main offender for a

Speaker 3

change in the guidance continues to be the loan book.

Operator

We worked strongly to hold back All loans in the first half reviewed all of our policies in June, July August. This is changing. We understand that we can accelerate, but not as it was before. It will not be feasible. We recognize that the loan book grows less than the previous guidance.

Operator

The market portfolio is Covering the market, NIA is helping us in this indicator, but it is not enough for us to reach the total effect first guidance. So Short term portfolios, loans from individuals, where we believe we have the highest price and we can hold a lower credit provision. So this is what we are doing. We are doing it but cautiously and gradually. But this mix The market improvement and when we ended the balance sheet, that interest rate reduction was not guaranteed.

Operator

But This is coming and an interesting prospective cycle is coming up particularly for 2024. But undoubtedly, credit and credit granting will guide us in the NII guidance. The market NII, as Casiano mentioned, tends to recover. I think this is a given it will improve in the second half of the year And hopefully, we'll end at a positive level in the second half, slightly positive, perhaps even in the next quarter. And it will continue to gradually improve along 2024.

Operator

And I think that the resumption of the loan book, as Katsana mentioned, will be the biggest Driver looking forward.

Speaker 1

So now we'll go back to Arnon Shirazi from Santander. Arnon, can you hear me?

Operator

So we

Speaker 1

are now still not connected. We'll turn to Bernardo Moloney from Autonomous. Renato, can you hear us? Good morning. Is it better now?

Speaker 1

Yes, much better. Excellent. I apologize. I'd like to talk about your view when you talk about the recovery For the coming quarters, if you look at Selic rate for next year with the offer of 9%, can we talk at A level of 18%, especially the competitive view that's very different from the past. Thank you for your question, So Renato, we understand that this moment of a reduction of ROE that occurred is a situational aspect, not structural.

Speaker 1

So of course, that the change in the market and Changing people's consumption habits has a structural aspect that the bank needs to adapt to. And that's what we've been doing since the pandemic. And I remembered in the last meeting that we had, in the last meeting Before the pandemic, every day, the bank would make 1,000,000 authentications at the teller. And now it's 90,000. So we went from 1,000,000 every day, 200,000,000 to 9,090,000 Authentications are the tellers.

Speaker 1

So there's a change in the market in terms of relationship with the customers and people's consuming habits that influence how they consume with our conference. That requires you to make structural changes that are essential, as I said. The change in the types of our branches, the reduction in size, the adoption of business units for advisory and service to our Clients no longer a branch for back office service or account payment or bill payment. Many processes that we've been developing in the bank with negative or as you saw last week, some Negotiations we have with some partners with Quantum Computing. The structural change we had on NEXX That is no longer an expense line or rather a strong investment line, but becoming But bringing it into the bank, so that it can bring the expense close to 0 and make the most of all the synergies between NEXT and Bradesco, preserving for the clients, especially lower income or heavy user clients or younger clients to have an option of

Operator

with our conference. Having a digital

Speaker 1

bank for themselves through Nxt, which has a different visual look than Bradesco, the way that they want. So there are, in fact, structural changes that may be that must be and are being implemented. And a good trigger for that was What ended up happening with the pandemic that changed completely these relationships, as well as the entry of new Competent competitors that require us to go through substantial change in relationship. And as I showed you, 98% of Relationships with clients with us go through the mobile service. So these are structural changes that we have been evolving and developing, creating through new Being creating through new methodologies for the development of systems through partners, The agile villas, squad, and that is structural and we have been implementing it quite well.

Speaker 1

Now in terms of ROE, as you said, well, that was a situation that happened in terms of market ALM and delinquency that affected

Operator

It is.

Speaker 1

Market ELM, I believe, as Fereci said, is done. It's solved the 3rd Q4, it will be positive again, 2024 with much better expectations in terms of results, interest rates Going down, we have portfolios formed with better rates, so that helps improve the conditions. So it's hard to pinpoint when, Renato, But we've been working we are working quarter over quarter to deliver an ROE at the levels we delivered in the past. You can be sure of that And we will continue to pursue the resumption of that ROE that we used to deliver up to 2 years ago. Thank you, Bernardo.

Speaker 1

And now we'll turn to Carlos Gomez from HSBC.

Operator

You may go ahead.

Speaker 5

Hello. Thank you very much for taking my question. I wanted to ask about the tax rate. It was particularly low this quarter, 8%. What do you expect for the rest of the year and what should we expect as a normalized tax rate without any changes to

Operator

So Carlos,

Speaker 1

the tax rate is at a very low level Due to the fact that the earnings level is lower, so the effect of the IOC leads this rate to be at a lower level. In addition, as you have been seeing, there is also greater participation of the insurance company in the total of the bank's results. The insurance company has a lower rate. So based on all that, we would say that a range a reasonable range for tax rates would be from 10% to 14%.

Speaker 5

And that's for this year. What about when things will rise, you have recovered?

Operator

Okay.

Speaker 1

So looking forward, as the results increase And take on the maintenance of the structure we have today with IOC. So the tax rate will normally increase. So I'd say that when we go back to the levels Of ROE that we had in the past, our rate will also go back to the levels we had in the past. Thank you.

Operator

Now we have a question by Nicolas Riva with Bank of America. Nicolas, Go ahead.

Speaker 6

Thank you very much for the chance to ask questions. I have a question on your 81 capital. So I See about BRL 14,000,000,000 of BRL 81,000,000,000 on the balance sheet. I understand this has all been raised in the domestic market. So I wanted to ask what are the important call dates for this 81 capital?

Speaker 6

And what's your plan if you plan to refinance this as well In the local market, I do not recall any local 81 issuance this year after the Americanas event. And then in general, how do you see your funding needs, your dollar funding needs? I think historically you have with our conference. We have a preference more to issue locally rather than issuing dollars and hedge back to reais. But if you can give us kind of your baby thoughts in terms of dollar funding needs.

Speaker 6

Thanks very much.

Operator

Thank you, Nicholas. Well, as regards Debt in Capital Tier 1, Tier 1 Capital Instruments, we have about 1.5% To us, it is the efficient limit. We do not need to have any additional issuances. We have an opportunity to issue the whole AT1 in the local market here at costs and with a structure that we consider to be very adequate in BRL, which to us brings a lot of efficiency in terms of not requiring hedge. So we do not have any big call event coming up.

Operator

Topless limit has been used and we will maintain these issuances here in the local market. We do not see any room for new issuances, particularly in the international market via AT1. Now as for that instrument's dollar funding needs, I will turn the floor to Cassiano because He knows a lot about this. Thank you, Nicholas. At international level, at this point, we don't see the right conditions.

Operator

Again, it all depends on market conditions. We still have a high CDS and the interest rates abroad. When we compare local and international issuance. Local issuance considering the high Solik rate is still better than international conditions, but we look at this every single day. So if we see an opportunity that is beneficial to double benefit us With international funding, we will consider that.

Operator

But right now, the local conditions are better. Thank you, Nicholas. And with that, we are ending the Q and A session. Questions that were not answered during this call will be answered by our Investor Relations team. Before I turn the floor to Otavio for his final statements, I'd like to remind you that in our IR website, you will find this presentation as well as all of the material related to our earnings release.

Operator

But I thank you for the presentation. Thank you, Ferretti. Thank you, Cassian. And thank all of you in particular for joining us, for your participation and attention. I hope that we have answered all of your questions.

Operator

I'd like to thank also Yvonne and Tiju who joined us online. And hopefully, we have answered all of your questions. But if you have Any pending questions? If you need more detail on any topic whatsoever, please get in touch with us. Furetti In our whole, I, your team and Oswaldo will be available to speak with you.

Operator

Thank you very much for your attention. Enjoy your weekend,

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Earnings Conference Call
Banco Bradesco Q2 2023
00:00 / 00:00