Banco BMG S.A. (BMGB4) Earnings Call Transcript & Summary

Good morning, everyone. Welcome to Banco BMG's Third Quarter of 2024 Earnings Conference. I'm Danilo Herculano. I'm responsible for the Investor Relations, M&A and Institutional Distributions. Today, we are joined by Felix Cardamone, CEO; and our Vice President, Flavio Neto; and Joao Consiglio. Please note that this conference is being recorded and will be made available on our IR website. [Operator Instructions] Please remember that the presentation material, both in Portuguese and English, are already available for download on our website. Before proceeding, I would like to clarify that statements made during this conference regarding the bank's business outlook should be treated as forward-looking statements. Investors and analysts should understand that general conditions, industry conditions and other operational factors can affect the bank's future results, potentially leading to outcomes that differ from those expressed in such forward-looking statements. Now I would like to hand it over to Felix to begin this presentation. During this quarter, Felix is on a business trip, but we are monitoring his connection. Please go ahead, Felix.

Well, good morning to everybody that is participating. I'm very happy to present the results of our third quarter. I would like to start with Slide #2. During this fifth consecutive quarter, we continue demonstrating a positive evolution trend regarding net income and ROAE. We have made an effort to deliver these results that come from the improvement of margin, the improvement of production, a sustainable operational result, controlling costs, managing default and this is a very challenging market. Now on Page 3, I believe that despite all the difficulties that the payroll market is facing, we have continued focused on an impeccable execution on our plan focused on our core business, as I also mentioned, operational efficiency. In 2023, what we pursued was to provide a positive operational result in the bank. We focused on cost reduction and adjustments in corporate structures. 60% of the management will have changed with a more suitable profile. Deep review of credit and collection strategy, the discontinuation of noncore businesses, I can mention here. As I mentioned, open-water card that presented high default partnerships with retailers that we discontinued last year. And now we continue with the strategy, we sold our share in Granito – acquirer. And recently, we have sold BMG Insurance for [ Ecobank ]. With this, now we have a leaner structure, and now we're focused on the core business. And after adjusting our credit and collection strategy, we focused on the origination growth. Quarter-on-quarter, we have grown in origination. We also strongly focused on our funding structure. Shrinking our funding through platforms and accessing more the institutional market, we also focused on the customers' journeys, and this has brought results in terms of customer satisfaction and the cost of service. We strongly focused on training and team development in the commercial and the support areas. And with all of this context, of results and strategy adjustment for us, it was very important to upgrade our ratings that, as a result, would provide a cheaper funding cost as you will be able to see. Throughout this period, our Fitch was upgraded from -A to A. That was in October of 2024. Moody's went from negative to stable in September. And the new Standard & Poor's rating that is an A now. So these are rating upgrades, and this is a result of our effort and the return of equity that now is above 10%. We are aware that there is still a lot to do. But clearly, we are reaping the results of market image valuing our shares, as many of you know. Now on our next slide. The consequence of our entire strategy is based on 3 important pillars. Number one would be our profitability. During the first 9 months of last year, we were 2.8% of recurring net income. Now our quality of assets has improved constantly from 5.6%, we went to 4.7% and with a good result. The result is a sounder capital. And this is Tier 1. We've reached 10.5% and total Basel Index 14%. So we're on the right path. The results are emerging, and I would like to strengthen within a very challenging market with tight margins where what we have to do is to always we're focused on efficiency, funding efficiency, origination efficiency and cost efficiencies. And now our next slide. Unfortunately, he has muted his mic. We would like to apologize. Felix unfortunately has unintentionally muted his mic. Felix you press the mute button unfortunately. So going back. The consequence is that we have a margin evolution after the cost of credit. So from -- in the last 9 months, our margin grew 20%, strong cost control, the automation of processes. Operational efficiency, which is our great model in such a tight market has improved. We went from 50 days of efficiency index to 53.2%. Therefore, we have a higher portfolio, a greater origination with our expenses practically stable, slightly below last year. And the operational result is 10x greater when we compare it to the same period last year. This is another level of results of indicator, and this clearly demonstrates a trend, and this shows that we are -- we have a suitable strategy. Now on our next slide, Slide #6. We do understand that currently we are improving a lot of relationship with our customers. This is a bank with a highly consolidated image in the market, be it with the end customers or partners. We have over 10 million clients, almost 70% with credit products. Our customers are part of the margin. The insurance penetration is improving, the origination volume it is over 30% above the same period last year. And little by little, we have been growing with cross-sell. It is important to highlight in this slide that despite payroll or consigned is tighter, we have an efficient origination structure, also an efficient assignment portfolio. And with this, we can have access to a base of customer with a positive acquisition cost. So I can say that consignment today or the payroll product, although it's a relevant product in our portfolio, it's a mean to acquire customers, sell insurance, other products and cross-sell and acquire new customers. We are evolving in this. We still have room for improvement, but we do believe that we are on the right path. And on our next slide, Slide #7, we see that despite the control of our costs, we are not setting aside quality, the service to customers. Well the call center activations dropped 34% year-on-year. Why? Because we have reviewed in our 2024 strategic priorities, the customers' journey, what we can improve, be it in the approximately, in our products by and large, when we communicate with our target audience, the transparency and relationship, the stability of the technological platform that has been evolving a lot. Therefore, our customer satisfaction increases. Now when you see here the complaints of the Central Bank, we dropped 60% from the second to the third quarter of 2024. We're not showing the results of last year because the Central Bank's methodology changed, so we cannot compare our NPS service, its almost 80%, which is excellent. And we've received excellent awards being Fraud Prevention Seal from CNF and Febraban and the Award for Companies That Most Respect Customers. We have focused a lot on origination profitability. We're also controlling costs strongly, be it with the improvement of process, systemic stability and focus on customer satisfaction and the right allocation of our resources. This growth comes together with a higher satisfaction of our customers and their profitability. And here, we have strongly invested in the development of our team. We do understand that a bank must have systems, stability, but a bank is made up of people. So we have the -- we have trained our team. We're focused on this strengthening our culture, creating training programs for our leadership, investing in the agile model, creating squads or QRs, technical logic, knowledge, sales. This has helped us a lot, be it in the engagement of our team, as well as better productivity from our personnel. And it is excellent to know that despite all of this effort or in addition to all of this effort, we came third in a Great Place to Work. And we also have a mental health award. We've grown a lot. We're being more productive, but our team and our culture will never waiver the good quality of life of our team, balance between personal and professional life. With this, we have engaged, motivated and a happy team and a happier team can work better and better service our customers. Now to Slide #9. I would like to strengthen our pillars which are strategic. #1, that we have an extremely big addressable market, which has almost 100 million customers between retirees and pensioners, between public service and private sector employees. And in the upcoming years, we will have 15 million retired people. Our addressable market is gigantic. There is great potential. We will not go for other type of client because our strategy is to be specialized on this market. There are customers to service and grow here. Number 2, we have great experience on servicing this public. This has been our DNA for decades, which is a synonym of category when it comes to servicing these customers. We have financial products, insurances and services for this audience. And when we understand the needs of this audience, adjusting our products to their needs, offering the right product to the right customer through our 3 channels. Today, we have extremely strategic partnerships with our bank correspondents where we have an excellent relationship of over decades. Number 2, we have approximately 800 help! stores that perform impeccable service, be it our franchisees or our own stores disseminated in Brazil. And 3, is a digital channel through an app and other tools like WhatsApp, et cetera. This combination of an extremely thriving customer base with products and services, which are better and network service, be it physical and digital and totally focused on efficiency and the impeccable service to this customer. Well, these are the pillars to continue delivering results which improve day by day. Therefore, we are extremely happy and confident because we've seen excellent results in the past 5 quarters, and I believe that we will maintain a positive trends in the upcoming quarters and years and always working based on disciplined execution. And now I will give the floor to Flavio to continue with the presentation.

Thank you, Felix. So let's talk about products and businesses. Now on Slide 11, you can see our portfolio, which has a diversified profile, not only diversified but secured. We have secured loans that would be the FGTS and consigned products that together are 70% of our portfolio. This is why we have a conservative profile, and we are growing in our core business. I would like to highlight FGTS, the benefit and also the direct debit loan, because the payroll credit card, although there is strong origination, we also assigned it. So it contained the growth. Now when we go to Slide #12, here, you can see the quality of our credit portfolio. You can see that the main indicators when we see NPL over 90. But these are indicators that go hand-in-hand with a slight growth in our coverage index because we are carrying out additional provisioning, strengthening our balance, bearing in mind the implementation of 4966 next year. So we are preparing for the future effects. Now on Slide 13. Between [indiscernible] shows our credit portfolios, I would like to talk about our products. Our non-credit products, that would be the insurance products, there has been an increase in the issuance of premiums from our brokerage and our insurance company. We're talking retail business. We had BRL 266 million, the insurance, BRL 101 million in premiums. In terms of insured premiums, we divide this with Generali. Therefore, this is why the brokerage has higher level of premiums than our insurance. Some highlights. One of products that we recently launched that have been successful as the BMG Med and the Protected FGTS, we have strongly increased the level of assistance utilization. When we see the customer service, there is a higher satisfaction level when our customers talk about our products. Now a macro view of our insurance operations. We have practically 9 million policies. Therefore, this is significant operations. Revenue with insurance operation, almost BRL 54 million and the combined ratio of 71%. That, as a matter of fact, shows that our insurance business is one of the most profitable ones in the market when we compare it to other insurance companies that focus on the same audience. Now Joao will talk about our payroll operations.

Thank you, Flavio. Good morning to everyone. On Slide 14, we will talk about payroll loan. And the main message is that we are reassuming our natural market position. As Felix said, we have always been a synonym of category. And as this in the payroll products, we've had major presence in origination through our different channels, be it correspondent franchise and digital. And our resumption to our strategy and focusing on core products, well, now origination is extremely significant. Now this origination is aligned with an assignment strategy that is suitable because the spreads in these products are tight. Regardless of this fact, our customers that are originated through payroll loans are also the object of a cross-sell strategy with other products where we don't only loan, but we have the payroll credit card. We have the benefit card. And we will talk about them and how we were able to resume the growth in these portfolios. And we've originated more. We assigned a part of these loans, and we resumed the growth in a more moderate portfolio. Now Page 15. We have our payroll credit card and our benefit payroll card. We feel secure in origination. And now we have video recordings with all of our customers. And this has proved to be an interesting strategy. With this, we avoid any problem in origination, civil lawsuits. And we resumed the growth of this portfolio spearheaded by the benefit payroll card, as you can see here on the right-hand side. This is an important portfolio and BMG has a significant market share. Now on Slide 16, you can see that what we have done in the FGTS after the assignment during the first semester, this portfolio has grown significantly. And the cross-selling strategy is being very successful with our C&C products that would be personal payroll. And here, this is a portfolio that has presented an important resumption in growth, and we will continue following this trend in the upcoming quarters, always with a conservative profile and understanding thoroughly to what customer we're extending these loans. Now we can talk about our wholesale business. Where the middle and corporate portfolio has resumed its growth. And here, we have safe guaranteed operations with no type of ticket or customer concentration. Here, we have wholesale operations, which are safe. They're not as relevant as the payroll or secured portfolio of retail. This is growing with safety and profitability. Now the main highlight here would be for our entire strategy within the capital markets that together with our investee, Araujo Fontes, there were 32 offers as coordinators, and this showed our vitality and our skills to operate in a market of more structured operations. Now I will hand it over to Danilo to continue.

Thank you, Joao. Now let's go to Slide 19, and we will talk about our financial margin that was tight during this quarter because of the growth of our core portfolio that was influenced by the growth of personal credit contributing with revenue generation. On the right side, you can see the same trend with less growth because of the growth of origination that is part of this commission that -- now on Slide 20, we have to see how the bank has had stable expenses. But when we see the last 5 quarters, it is going hand-in-hand when we compare it to the growth origination of portfolio, highlighting that the cost culture implemented in the past quarter is more strongly rooted. Here, civil lawsuits, we can see that they are stable and at lower levels when we compare it to our credit revenues, which is an important revenue. We did have civil lawsuits, but we were successful, demonstrating the capacity that the bank has to defend these civil lawsuits due to the improvements presented by Felix when it comes to servicing and formalizing these payrolls. This means that we have improved our efficiency when we see from fourth quarter last year up till the date that went to 53.8% to 51.8%, showing how we control costs. We have better revenues and better margins. Now on Slide 21. Now the consequence of these results of margin and cost control, here, we have twice the operational result. We're comparing Q3 this year, Q3 last year. And this is a positive trend in the operational results, something that you will see in the next slides. And this, we can go to Slide 21. Now here in funding, we are strongly focused on ALM. When you see the cash in the beginning of the year above BRL 5.8 billion in December, well, this is due to the maturity flows in the bank. During the last 2 quarters -- during the second quarter and the beginning of the third quarter, there was a maturity flow, this is why we had a higher cash. Now with this new profile in maturity dates, our cash is 1 [ PL ]. Everything is because the matching of assets and liabilities properly done 20 and an ICR that represents a liquidity of the upcoming 90 days above BRL 360 million. We have the major highlights. Number one is our effort in creating new profiles for product profiles. We had a high concentration of deposits in quotas, although this focused on ALM and liquidity, it was more expensive because of compulsory or the FGC. This is what we have to pay the FGC. The growth was sound in the institutional market operation, where we go from BRL 5 billion to BRL 9 billion, a growth of over 76%, dropping the -- going to 73% in time deposits. And throughout 2024, we saw an important improvement in 2 major products that were very important, that were financial bills. The mission was CDI +1.9% in October. In October, we've issued CDI +1.50%. Now in debentures, the first -- that is a 5-year reference in May with the risk premium of CDI +1.80% and now CDI +1.20%. In addition to this premium -- the risk premium, we have to highlight the amount of orders and the participation of institutional investors within this structure. And now on Slide 23. Now the consequence of the improvement of results and quality of asset reflects an adequate capital level. During this quarter, we see a slight consumption of tax credit that generates a positive dynamic, mainly when we see the Level 1 of capital base that from 1Q goes from 1.7 with a potential Basel of 40%. This level of capital is suitable. We have a reference of public bonds and through hedge account as part of our equity. 70% of these bonds will mature by the end of 2025 and 70% -- of this 6.6 -- 0.6% go to our capital base. And this is important to face the challenges of 4966, but also to approach the sustainable operations for the growth of our bank. And now we will initiate our Q&A sessions.

Our questions can be sent through the Q&A icon, telling us then your name and your enterprise. Our first question comes from Raphael Tavares from AF Invest.

Congratulations for the result. What about the sensitivity of the portfolio of the bank with the interest rates? What are the impacts that we will see in the next figures of BMG? About consignment, how do you see the product because interest rates have gone up, and we haven't seen the same ceiling movement at the moment? What are the main impacts that you observed for the bank -- for the bank's business?

I will start and then Joao can join me. Remember regarding the portfolio sensitivity. Our portfolio is highly protected. Our portfolio is hedged to interest rates. Therefore, we will -- we don't see impacts in our stock. Nonetheless, when we analyze the future of the business, there is a highly challenging environment. Our product has the lowest historic spread in terms of new originations. When we see the funding costs, we see 2, 3 years and we compare it to the product yield. This is tight. Now we have been doing our job. We strongly focused on efficiency to reduce cost because we have to adapt ourselves. Number 2, Joao mentioned, we have been focusing on our cross-sell, how can we have products with more profitability. And we've use credit assignment because the payroll product has -- is higher than what we've seen in the past. This is why we're using credit assignments. By and large, I would like to say that is pity not to be able to work with all the audience that we would wish to work. Well, the audience that presents more risk, we can't offer what we would like to offer, because of such a tight spread. So we are selecting an audience with which we will have profit. And this, as a matter of fact, will become a drop in offering that is less than what we would like to serve.

Our next question from Pedro Avila from VAROS. It is based on the past question I'm going to ask that.

Kudos for the results, I would like to know the -- what is the consignment appetite with INSS with the ceiling of interest rate that is not following the increase of Selic. Is it possible, because BMG thinking on operating in the private consignment market.

According to the government, well, we select our audience. We do -- we are fortunate to be a bank that operated -- which operated with share that was lower than we were able to offer this to customers of less default this payroll offering. And this is something that we did to resume our position. Regardless of this, we could offer this to more customers and retirees if we were at a normal market level. Now the private consigned or payroll, now this is an important opportunity. This is a completely different problem from the INSS payroll product when you have a direct connection or a safe risk. As a matter of fact, if we -- if this flows and if the market is able to compete freely to offer to the customers according to their risk and their inflow, I believe that this market can be as big as the INSS market.

Thank you. And we have from [ Frederico Benito ] that talks about a number of BMG competitors are lowering the appetite for consignment products because of lower of spreads. How can you be competitive in this market? It is exactly what we are saying. Number one, we have to be efficient. We have to do our homework. Efficiency is the name of the game. We believe that current spreads don't sustain themselves throughout times. We will see a movement at a given moment. We don't count with this. We are originating, assigning the portfolios that we originate and use this origination for other operations and cross-selling from our base that as a whole, provide a good return to our results. We have [ Elise Suarez Oliveira ].

Congratulations on the results. Given the restructuring measures taking, including asset sales, how do you see the bank in the long term? Will the bank focus mainly on payroll loans or will it diversify more?

Felix, could you shed light on this question?

No problem. Well, as my colleagues already mentioned, today, we operate the payroll market with very tight margins, the tightest in the last 15 years. This is extremely challenging. And as Joao mentioned, the NPL of the payroll product is focused on that. So people -- the older people have a higher debt index than younger customers. The ones that are just retired. This tighten market. The market, by and large, has to work in a restrictive fashion, diminishing the appetite of credit for a public -- for an audience of low income and with a higher age. So we believe that this is not sustainable. It is already unsustainable. So this is point number one, strengthen Joao's comments. This doesn't mean that we are not working with a payroll product. What we're doing is we're being more selective to protect a very tight margin, historically speaking. And this is a point that concerns us a lot. And we could produce much more. We could service more people at the cheapest market interest rate. But the way the payroll interest rate ceiling is being managed vis-a-vis funding costs, well, our growth in this segment becomes limited and not only in our case, but also in the market, by and large. This is not only demonstrated by the figures, but these are statements from different bank CEOs that have already announced their results. First and foremost, I would like to say that my concern is based on this. This being said, I would like to say that our focus is not the consigned product. It's the retired customer. And as I mentioned, there is a major audience to be serviced in this market. We're talking about over 50 million customers. The addressable market is major. Now to be able to service this audience, we need, number one, excellent operational efficiency. So we've been maintaining our costs strongly and the figures demonstrate this clearly. We demonstrated from the beginning of 2023, but in reality, our costs have been flat even when we compare it to the average of 2022. So what is it that we can do in a challenging market? We needed an extremely low operational cost. This is point number one, and we're focusing on this. And how can we service at a low cost through strong investment? In the evolution of our technology platform and in the evolution of our operational platform and then also the data platform? We are focused on the investment on our platform. In micro services, we're migrating to cloud service. And with this, we will have more flexibility and scalability, low cost and stability. This is of most importance. These are pillars, although they don't appear on the day-by-day, these are the pillars of our growth. And this is a process that we have been following closely. And when we see costs, we're not wavering this. We're allocating our resources in the right place because we need a strong base of structure, as I just mentioned. This is point number one. There is an audience that can still be explored. And we are developing this technology platform very swiftly. We are seeing the results now. Now number 2, would be strong investment on our personnel, our sales team, the technology, the implementation of agile model to be more productive and quicker. Three, would be our products and services. We need products and services that meet the needs of this audience. Therefore, our payroll products, cards, insurance, apps, this entire journey is being reviewed to better service these customers so that they're more loyal. Cross-sell increases, profit per customer increases, cost drops. We have a better rating because of operation funding cost drops and manage -- and our NPL drops. Now payroll credit cards have to be profitable, and we're doing this through assignment, but this is a way of acquiring customers. Therefore, the results show this clearly. We are repositioning our bank that has a spectacular brand, a solid balance, a good relationship with bank correspondents, a good distribution network through our own stores and franchisees, which is strong. And our consolidation is taking place in the worst moment of the market. And it will not last, and it is sustainable. So when -- as soon as the market improves with all our repositioning in the most difficult moment. And this is a challenging moment where we're having success. So as soon as the market improves, we will increase our results, our portfolio, and this will be carried out in a sustainable way. Despite a difficult market, I am reassured regarding the future and the success of the BMG Bank, be it in the short, mid or long run.

Thank you, Felix. This was a full answer. Now we have Julio Borba from Benndorf Research.

Congratulations on the results. I'd like to understand the outlook for credit card delinquency, which has been rising considerably. Do you expect it to increase further? Could you also provide the trend for delinquencies from 15 to 90 days? Could you shed light Flavio?

Thank you, Julio, for your question. Okay. We've seen this movement. The rate drop in loan and in credit card. Both products are tight today, and we could see this in one product or the other. And we could see a broader offering, as Joao said, if it weren't because of the rate restrictions. Now the second question was? Now regarding the NPL, I was reading another question. Now the NPL of the payroll credit card, we had higher NPL than what was expected. There were stages where we had higher NPL. This has ended this quarter. So during the next quarter, we expect to see a lower NPL when we think about payroll credit cards. So we do expect improvements in the upcoming quarters.

Thank you, Flavio. Our next question, [ Fernando Gomez ].

Congratulations for the results. We see that other banks in the market, as a whole, are originating fewer FGTS-backed advanced credit, but this doesn't seem to apply to BMG, which managed to keep originating in line with the previous quarters. What is the bank's differentiator in this regard? Is the key to this success with the core band?

Now regarding FGTS, this is interesting. We combine this with channels, be a core band, our help! stores, our franchisee networks, digital, we've been very successful in origination. As a whole, on a monthly basis, we have been able to access these customers. And this demonstrates that our market position, our brand still has a lot to be explored. We have a large recall. Our customers highly accept our products and our brand is a name of trust because they know that the operations will be performed. We have lots of digital origination, and we're being very successful. And we will continue operating in this market because this is where we started exploring other audience in addition to retire.

We have Eduardo Nishio from Genial Investimentos.

Number one, could you share the profit sensitivity to 100 bps increase in the Selic rate?

Well, the banks have a capacity to review the payroll loan, now LM structure as we saw in our liabilities, we have been able to structure the M&A structure, adjusting maturity and reducing the premium cost. Nonetheless, when I talked about the reduction of time deposits, there has been a reduction of the compulsories of the CDI. The funding cost is above the CDI. So the less compulsory in our base, we will have more efficiency. And hedge structuring, we comply with our flow currency hedge. We are post fixed, but we also have a hedge that protects us from different oscillations.

There would be the 4966. Could you tell us how many bps you expect with the introduction with the new rules of 4,699 in 2025? What are the impacts of provision? The provision expenses will grow. How -- what percentage in a scenario of growth?

Okay, Nishio, thank you for your question. Let's call about 4966. There are 2 major impacts here. One would be the PLD instead in seeing an incurred loss, we have a PDD on the expected loss. So when we would see the delay, we would have a more significant PDD. Now when the operation is created, you know what kind of loss you expect for this type of portfolio. The operation starts with this loss. So as you accelerate the growth of the portfolio, we will penalize more in provision expenses. Now if the portfolio is dropping, you have the reversion. This is a benefit. This would be a reversion of these provisions because you amortize the portfolio. On the other side, you have a positive impact on the bank's balance. Regarding commissions. Today, due to the determination of the Central Bank, when you pay commission to the bank correspondent for origination, you can deduct 6%, but part of this is paid from the start, and this lowers the result. And with the 4966, Brazil is closer to international accounting standards, and this is paid throughout the contract. You have a positive and negative effect. We believe that net will be -- well, we'll have a negative effect on our equity. And with our base of Tier 1 capital, we expect 10%. Today, we're 10.5% and the expectation with the 4966 is to work with a level above 10% from the get-go, and we will be able to we will be able to create a more robust base of Tier 1.

Now to end our Q&A session, we have a question from [ Ivan Gomez ].

I am Ivan Gomez. I would like to congratulate you. So you did not sell the lot of the NSS.

Thank you, Ivan. We want to understand the auction or what was their strategy, and this will not impact -- we continue business as usual. So let's understand what this auction. This auction had a pre-requirement, regardless your bet, you could do 1,000. In our case, if you have a branch, you could win. But as I have 20 something branches and our strategy is not to expand and to invest in new branches, we believe that our model via bank correspondents and franchisees is what helps us. This will be the same driver of expansion of our operation. We believe that if we would gain one batch, we would be restricted to this branch that would receive the priority of benefits. Our strategy was to give the lowest bid to be able to make the payment not only enabled but to be competitive. So this is -- this was our strategy. This is what we realized, and we are extremely satisfied with the results because our strategy was not to expand our branch network. Another thing that I would like to highlight is that at a given moment, and this was part of the tender, they spoke about the 90-day exclusivity for payroll products. This was overruled. The auction was carried out. So there is no exclusivity here for payroll products. And we are convinced that our -- that this was a correct strategy. I don't know if you would like to mention something.

So thank you. So we will bring to an end our Q&A session. I would like to highlight that any additional questions, we have our IR team at your disposal, and I would like to hand it back to Felix for his final comments.

Thank you, Danilo. Well, once again, I would like to thank all of you for participating in our video conference call. Now a brief summary. Here, we have a highly challenging market. And unfortunately, Felix, you have muted yourself again.

I apologize. So we do have an extremely challenging market, as we mentioned in a number of occasions. The bank has structure balance. It is a traditional bank, and we have a winning strategy. In order to weather the situation, as we've weathered other challenges throughout the last of our 94 years of our existence, be it the operational result improving quarter-on-quarter, well, this demonstrates this. It demonstrates the operational efficiency. Our NPL is under control and the trend is to improve the situation. The stability of our technology platform has helped us a lot. And I also believe that -- I mentioned this, but we have been able to deploy a new strategy in civil, in negative actions through origination and the good management of our stock. With this, there are good prospects. And as we've seen, there has been better and cheaper funding structure and the constant evolution of our products, services, insurance and so forth. So I feel extremely reassured of the pathway that we are paving for the future in the bank. And I would like to thank the BMG Bank team, the support of the management and all our employees, which have provided impeccable services to our customers that have taken care of the operational side, I saw a focus group from our customer, and they complemented the service from our help! store, how willing we are to help us. So our main asset is the DNA within us to better service our customers. And I would like to thank our franchisees because we're working closer and closer. And with this, we understand the needs of our customers. So this partnership has an incalculable value and our correspondents that have been our partners for decades that have been close to us. And that last the unconditional support from our Board regarding the process that we are going through. We've been able to weather this rough situation. There is a lot to do. We have a long pathway ahead of us. Nonetheless, we have all the elements to continue delivering sustainable results quarter-on-quarter. This is my result, and I would like to thank all of you for participating. This way we thank you for participating in our video conference call. Our IR team is at your disposal, and have an excellent day. [Statements in English on this transcript were spoken by an interpreter present on the live call.]