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

Good morning, everyone. Welcome to the First Quarter 2025 Earnings Results Conference of Banco BMG. My name is Danilo Herculano. I'm responsible for the areas of Investor Relations, M&A and Institutional Distribution. And today with us, we have Felix Cardamone, CEO; Flavio Neto; and João Consiglio, our Vice President; and Marcelo Picanço, CEO of BMG Seguridade. We would like to inform you that this video conference is being recorded and will be made available in our IR website. [Operator Instructions]. We would like to inform you that the release material in English and Portuguese is already available for download on our website in the Results Center tab. Before proceeding, we would like to clarify that any statements that may be made during this video conference regarding the bank's business prospects should be treated as forward-looking statements. Investors should understand that general conditions, economic conditions, industry conditions and other operating factors could affect the bank's future results and could lead to outcomes that differ materially from those expressed in such forward-looking statements. I would now like to turn the floor over to Felix, who will start the presentation. You may proceed.

Good morning, everyone, who's attending our conference. It's another day where I have the honor to discuss the results with you. I would like to start on the first slide. I would like to draw your attention to the consistency of our results. In the first quarter of 2025, we delivered an ROE of 12.1% when compared to the 9.9% in the same period of the previous year. And our results, our net income grew by 22%, also when compared to the first quarter of 2024. On the next slide, I would like to say that our strategy is ever closer to our clients through a continuous evolution of understanding of the life cycle of our public side, public -- target public and to serve ever more our clients to do the development of our products and processes in an ever better way so that they can be ever more appropriate to our public. We want to get ever closer to our clients. And on this slide, I would like to draw your attention to some points. First, the origination of our core products and even in a market with restrictions of origination, we grew 2.9% in the comparison to the same period of last year. Second, the growth of our origination by self-contracting that grew by 22.5%, showing the process evolution in digitalization and also on our journey ever more fluid to our public. And lastly, I would like to discuss our cross-sell increase. And this is an indicator that we have been watching very closely. And it shows -- it ensures that we are evolving from a transitional bank into a relationship bank with the public. And we understand that this selling, optimizing the relationship of course, never forgetting the profitability is fundamental to our strategy, not the short-term strategy, but also in the medium and long term. Next slide. I would like to show that our priority is profitability without any doubt. It's also efficiency by means of providing better sales quality, improving our products and also providing better service in our constant search for customer satisfaction. We can see some indicators here that we follow internally, and we are now disclosing them with you. First one is the NPS service, which is in the zone of excellence, which is so good. We have reduced our costs. We have also had a self-service retention that has reached 88%, so that shows that operational efficiency is very important, but clearly, without disregarding the quality. And this can also be demonstrated by the 2 other indicators, which are public indicators. The ranking of complaints of the Brazilian Central Bank, we improved by 15%. The lowest, the better, those who are at the top received more complaints. So on the right of the slide, you can see the MESC research. It's a Google company, and we do this research together with Google and the main apps are evaluated. And we are -- we rank second as to the technical part. And participate is the first one in the rank. So it's a combination of profitability, focus on the client, efficiency and good service provided. All this has been bringing good results. So one would not rule the other. We are focused on the public class C and D, 50 plus, and this is the niche we chose to operate with. It's a very broad public addressable market of BRL 40 million -- BRL 50 million potential in the public payroll segment. And with all potential clients that we have the private payroll product. We focus on the 50 plus. We understand that this is our niche and all our team has the mission of developing journeys, products, services, sales that could be provided in a special way. So we are specialists in the market for this public. Moving on to the next slide now. Here we go. Okay. On the next slide, I would also like to stress to point out that one of our biggest strengths is the capacity that we have to leverage our physical channels and digital channels in a combined way. And this is a need that we understand that our target public has. And there are some points that I would like to draw your attention to. First, our network is eligible to pay 87% of the INSS right to lease. So we have a very good position in relation to our addressable market. And another point is that the growth of our help stores, so it's important to mention that we want to reach the number of 900 stores up to the end of the year. Our distribution network is also conducted by means of our partners, correspondent. I would like to highlight that we had a convention and nearly 450 people attended our event. And so we enforce how important the banking correspondents are important for us. And all the -- I would like to talk about all the investments that we have been making in the digital experience. In the previous I showed the NPS of our app that is very specialized and has been resulting in good outcomes. And we also have the credit shopping, which is the client can only use one click. And if the client uses the CPF, the tax payer number, they can receive all the products we can offer, credit and insurance. So we have been investing continuously in this digital experience, combined with our physical strength. And of course, we have -- we're always working with a lot of transparency with a lot of clarity with our target public. On the next slide, as you can see, the bank continues on its journey to evolve in its technological platform and adopting new tools so that efficiency can enhance so that we can grow in scale and increase customer satisfaction. Something that I would like to draw your attention to is the use of cloud. Nearly 50% of our processing activities are already in the cloud mode. We intend to continue this evolution, and this brings a lot of speed to our processes as well as our micro service architecture will help us speed up the implementation and development of new solutions. Another point that I would like to point out is the approval time for a payroll loan that now takes some minutes, and it used to take hours. And we have more than 30 internal initiatives related to artificial intelligence, always focused on security and efficiency. And there are some highlights which are quite tangible related to our results. I would like to point out in the legal level, we reduced 70% the defense preparation time and then reached a 73% reduction in the time of analysis and also in providing responses and also our architectural agents, which will bring more simplicity and agility in the routine of our developers. I would like to point out that we are not using artificial intelligence in the front, I mean, for our clients to use, but we have been applying artificial intelligence in our front so that we can promote this efficiency and understand how we can and must calibrate and use artificial intelligence during this evolution. So it's a combination of a more modern architecture, cloud service, digitalizing processes and using new technologies. They all bring good insights either from the viewpoint of product development, service and also all things connected to our operational efficiency. Now I would like to turn the floor over to Flavio.

Thank you, Felix. Good morning, everyone. It's an honor, a pleasure to be here once again addressing you. I would like to start from Slide 8. We are going to discuss our credit portfolio. Let's begin with our more relevant products, which are the payroll products, the payroll credit cards with a growth of 2% when compared to the last quarter with a trend that has been maintained for some time of growth in this portfolio. On the other hand, our highlight for this quarter was the payroll loan portfolio that grew more than BRL 700 million. And this growth was very much driven by a strategic decision that we made in this quarter associated with the pressure of margins. So we decided not to forget about -- put aside the loan. We saw that the interest rates were very high. So we made a decision to hold this loan portfolio for this time. And now with the curve of interest rates more stabilized, we are going to go back to how we will operate in the second quarter. Our retail individuals portfolio had a growth of 7.6% and the main product in this portfolio is the FGTS together with the personal credit for pensioners of INSS and both portfolios had growth, but it was mainly by the second one related to personal credit and INSS pensioners. Our wholesale portfolio had a little drop, but this is not a trend anyway because we see a stabilization trend. And when we look at U.S. payroll portfolio, we have a very strong strategy to reduce it. We saw that the portfolio has already dropped BRL 600 million to BRL 700 million. In this quarter alone, we are likely to see reduction trends along the year of 2025 and possibly even in 2026 until we can zero this portfolio. So as a whole, our portfolio grew by 2% and with the payroll of loans that was the major driving force. On Slide #9, we talk about the quality of our portfolio -- payroll portfolio. We start to adopt the resolution for 2,966 that came into force as of the beginning of this year. So we disclosed our portfolio in the stages of 1, 2 and 3. The portfolio is reaching nearly 90%, 91%. With this resolution, we increased our provision of about BRL 1.2 billion. And our coverage ratio then moves from 108% and goes to 202%. And we feel very comfortable, well covered. When I'm doing -- while I'm doing this, we see that over 90% rate with a reduction. So the increase of the provision is basically a result of the resolution 4,966. When we see the provisions net of recovery has already had some impact from the resolution. And the portfolio grew very fast, and there was an increase of expenses as expected, reaching a level of 6.6%. With this, I turn the floor to Marcelo Picanço, who will discuss more about our insurance operations.

Thank you, Flavio. Good morning, everyone. I'm very happy to be here with you discussing the evolution that we had in the business of insurance. Before talking about the figures of the insurance company, I would like to say that our focus is basically to work with inclusion. And there are 80% of Brazilians who do not have an insurance policy in a strong synergy with the bank. And we have -- and they also have the credit journey in here. So we had an evolution in the premiums that have been issued. So we reached 118 premiums issued. And this is how we see the growth in the insurance company with a net income with a return over capital of 98%, a very -- with this combined ratio of 78%, it was very important to acquire 100%. Of course, there are some regulatory approvals to be made, but 100% of BMG Seguradora, which is our retail insurance company has a potential to add 40 percentage points in the net income. And if we make a simulation for the year of 2028, it would represent more than BRL 26 million in the results. And in the first quarter, it would have an addition of BRL 6.5%. If we look at the BMG share that amounts to BRL 10 million. So the impact would be 10 bps is on Basel. On Slide 11, I would like to point out the evolution that we also had in the broker company, the -- with a growth of 41% in the premiums that were commercialized. This is all the money that is provided with us in a robust and continuous manner by the clients. In spite of the number of policies almost reaching BRL 10 billion of businesses of relationships as we usually refer to. We have 20% of the clients of the bank who have insurance. We say that it's only 28%. So we see a great potential to increase this penetration in a public that has a very major opportunity to have their needs met in an adequate manner. And we have diversified those premiums that goes beyond the credit insurance. So we have solutions such as solutions to access to health that reached nearly 700,000 people with a growth -- a very robust growth as well. At this time, I would like to turn the floor over to João. Thank you.

Thank you, Marcelo. It's a pleasure to be here with you. Good morning, everyone. I'm going to discuss the product. Flavio has already made some comments on the evolution of our payroll products, which was very robust in the first quarter because we were able to maintain the levels of origination when compared to the previous levels despite all the difficulties that we faced in this first quarter related to the origination. So maintaining the levels was something very important, very positive and the decision not to have any assignments considering the future aspects. So the portfolio grew in a robust manner. And 95% of the portfolio is related to the INSS. Of course, we have been trying to go for profitability of our portfolio with a higher operational efficiency of the bank, and we have been able to be maintained very competitive in this market. Only to add, I would say that we have a major opportunity here also to increase our share, our other public areas in addition to INSS. So that was still a small area for looking at our business, and we are -- we want to increase the participation of other agreements. On Page 13, we can see what's happening to our payroll credit card and also our benefit payroll card portfolios. We have been able to grow the portfolios and the value has been increased also as a result of the adherence by the clients to purchase, not only to withdrawals. And this is something that has been very important so that we can facilitate the use of the cards and that increases the number of cards issued. And our portfolio has been growing in a recurrent manner, bringing in clients that were closer to the bank. So the highlight is the growth of the benefit payroll cards. In this quarter, we've managed to increase our share. And since this is one of the main portfolios of the bank, we see a lot of opportunities to continue growing in a very consistent manner. Here, we can also see an important opportunity that we have to increase in public agreements. In the case of cards, we have a larger share, which would be about 12% in our portfolio that is represented by others and we have been able to grow consistently, especially in the past 3 months. Now moving on to Page 14. I'm going to discuss the retail individuals. And the main products are the anticipation of FGTS and personal credit for INSS pensioners. And this portfolio is the portfolio that -- on which we have been focusing, and we have also been growing consistently in the past quarters. This is an undersized product in comparison to the size of the bank. So we see a great opportunity to work with our clients in this line and increase the number of products per client in the bank. So we are very happy that this portfolio has been growing consistently with a lot of safety, knowing -- and a lot of confidence knowing what we are doing in the portfolio of personal credit. FGTS anticipation, obviously, is not something that has been growing in the market as a whole, but we maintain our share in the market. Moving on now to Page 15. We are now going to discuss our business, our wholesale business. As a reminder, our wholesale business has the support and it has an important strategy of synergy with Araújo Fontes for more structured activities and capital market, bringing the ROE for this portfolio. In this presentation for this quarter, we are now going to include what is the expanded portfolio and this is usually what represents our share in the wholesale businesses, including not only the credit portfolio, but also collaterals and securities that mostly are by high credit quality and net products where we do the origination, the structuring and the distribution of those bonds. This is a portfolio that provides a lot of guarantees, a lot of collaterals, nearly 90% of the portfolio has some sort of collaterals connected to it. So it's important to stress that in this business, we have been able to have a noncredit revenue, which is very significant that has been growing consistently along the time. Finally, I would like to mention that we continue to take part in different offers. And leading the offers. It may not be so good when you compare to the portfolio of the bank as a whole, but the performance has been very positive in the last quarters. I would now like to turn the floor to Danilo.

Thank you, João. Now moving on to Slide 17. I would like to start discussing the financial margin that continues to grow, driven by the results of the core products, such as personal credit that has been growing and contributing to the generation of revenue even within this challenging scenario. The margin had a reduction of the credit cost as expected. There was an increase due to the provision expense and commission and also the resolution that was mentioned. Different from other quarters, we decided not to use the retention and risk of benefits, and this impacts the index. Now moving on to Slide 18. The bank continues focusing on an efficient cost management based on the culture and strengthened with the operational technological efficiency gains that we had, as mentioned by Felix. Expenses have been dropping 4% in this quarter with efficiency level improving by 3.5% when compared to the previous period due to the improved revenue generation. Operational provision has a seasonal effect in the first quarter of the year, of course, due to less lawsuits that were filed. And it's important that it has been improving in terms of revenue. So the comparison has been improved based on the results. So less representative when you consider the result as a whole. So it's important in terms of operational provisions. It's important to mention the work that has been done internally, the use of AI tool, as mentioned, increasing the successful to finish the lawsuits. We reached 71%. This is one of the highest level in the historical series that we are presenting now. Now moving on to Slide 19, I would like to talk about the MIM management of the bank. The bank has been maintaining this liquidity level in a conservative manner. And this is the reason why we started to show this cash flow that it matches, especially in the short term, and we continue expanding and getting ever closer to the institutional public. The bank grew in the last 12 months by 6%, 7%, exceeding BRL 10 billion and already represented 30% of the total capture. There was a reduction in the term deposits. And this quarter, we had a reference value that is used to calculate the additional contribution value. We had more than 70% in 2023. And in March, we reached 55% in this quarter alone. Now moving on to Slide 9. I would like to talk about the capital level of the bank. The capital was impacted as we see as a result of the regulations that were implemented. So there was an impact in this quarter and 1/4 is related to the base ratio. In addition to the resolution, we have 492 resolution that impacts the RWA. But we understand that the bank has an adequate level for the capital expected in our operations. And obviously, it has the internal generation of credit and the tax credit that has positive results. The trend is that the basal will likely to grow in the next quarter. And if we consider the U.S. portfolio exit, either due to the maturity or the risk related to the portfolio, our Basel would be at 13.2% if we do the simulation. So I would like to turn the floor back to Felix for his last Pages.

Thank you, Danilo. Now talking about our priorities, strategic priorities and moving on to the next slide. I would like to -- I understand that this is very clear. Even in a market which is very challenging, we were able to grow our financial margin, and we controlled our costs very well. So increased our gains scale, our efficiency and as a consequence, the profitability of the bank. And with this, we continue evolving so that we can make Banco BMG a better bank, a stronger bank and also a more profitable bank. Of course, this is a big challenge. The inflation is very high, but the cost control has been -- has always been one of our priorities. Our average ticket is very low. The spread is very low, as everybody knows, especially when related to payroll products. So we have to focus what we can do in the company. And this has been the big direction that we took. So we are going to do everything we can within the bank because this is a cyclic market, and we are getting ready and we are evolving in a market which is extremely tough. And when the market improves, we are going to be very well prepared, very well positioned to reach a level of ROE and profitability very high. As everybody can see in the results that we share. And moving on to the last slide of the presentation, I would like to share with you a brief summary of our priorities -- strategic priorities. Can you go to the next slide, please? Thank you. This is to increase the addressable market and product offering, I think we have already mentioned this. Flavio or Marcelo also touched upon this point. We are going to leverage our channels. We are going to integrate and digitize our views and processes and to be ever more efficient. There are some points I would like to focus on the BRL 2.2 billion in credit origination of core products in the first quarter of 2025, our public sector agreements, which are active. As mentioned, it's still very small, but the potential is very large. So it's a portfolio of nearly BRL 350 billion. So there is room to grow. And we launched insurance and assistance, and we are gaining representation in this sense, which is always to focus on the need of our public. Another point that I would like to stress is our level of efficiency, which is very competitive. It has evolved. It has grown a lot in the past few years and the percentage of 75% of success rate in our civil actions. So this is a problem that the bank has been facing for a while. And after a lot of hard work, we found a way, and these numbers are already beginning to drop. I would like to mention that our originations we have -- in terms of origination, we hold a video call with all our clients, and this has been very successful. So we have 99% plus of success. And also the apps connected to artificial intelligence to bring more efficiency. As to the channels, 23% in origination via self-contracting. So we are ever closer to our clients and the constant growth in our network of franchisees and the launch of the credit shopping so that we can serve our clients better. And lastly, the increase in the index of cross-sell and the BRL 3.2 million of monthly users in WhatsApp. So this relationship is the channel -- the most fluid channel to our target public, and we are investing in this format of how we interact with our clients. And to end, I would like to thank you, thank the team very well of Banco BMG. All the team has been doing an excellent work. Everybody has made a lot in order to serve our clients and reach those results. It's a journey. Our journey and the market is presently very competitive, but our team makes a difference. So I would like to thank each one of our employees, the Board, the management, the support of all the Board members who are always ready to help us, our franchisees who provide support. They are always engaged to serve our clients. And we are also growing our network and our banking correspondents. So this mix is what makes all the strengths of the bank. So everybody is very well engaged with the strategy, everyone very well engaged with this focus on the client. And without this team, our evolution would never be possible. And also to point out that we are at a moment where we have lots of challenges ahead of us. It's a tough market we are facing. But to have this repositioning of the bank is an additional term because everything is cyclic. We understand that this is a solid market, a market that generates a lot of jobs. It's a market that offers to the final clients cheap credit, credit for them to make their dreams come true. And the bank is ever more prepared to face all those challenges. And when things get better, I'm sure that the bank is going to be in a position and it will be the winning player in the cycle. I would like to thank everyone for attending this call. And now we are going to open the Q&A session.

[Operator Instructions] So Pedro Ávila has the first question with VA Research. During the first quarter of 2025, we observed a relevant reduction in the credit classified in Stage 3, and that made the relationship between provisions and credit increased by -- from 36% to 54%. Could you tell us what drove that result and how it is related to the coverage ratio and default rate for the for the future? Flavio, can you help us?

Yes, of course. Pedro, thank you very much for the question. There are 2 effects that I would like to mention. One, you're going to see that we lowered -- we wrote down many things for loss. So this was a result of the improvement that we had in our portfolio. And the main effect is not this one. The main effect has to do with the resolution that came into force that I mentioned during the presentation. What does the resolution do? BMG and nearly all average size banks used to use a model of expected loss -- sorry, incurred loss. So the provision, every portfolio had a provision for retail. It would start with 5.5% of provision, and then it would go increase. And now it already starts with the expected loss. So in practice, the provision is already anticipated in some months. So most of the effect is related to this. And when we look into the future, since this methodology is going to be applied, we are likely to go along those lines whenever we see a higher coverage ratio and also an increase in the portfolio, different from what we saw in the past.

Our next question comes from Olavo Arthuzo with UBS. First question, I would like to understand the evolution of the public payroll product. I understand this is an important catalyst of the ROAE of the bank. I would like to understand how this portfolio stand in relation to the other share of the bank for me to understand how you do the calculation. I would like João to start answering the question.

Thank you Danilo, thank you, Olavo. As I said before, I even mentioned this briefly. Our loan of public agreements in -- benefit payroll and payroll credit would account for 12%. The origination, however, is coming above those levels, and it has been growing strong month after month. So we made a number of adjustments with technology filters and ways of operating with new public agreements. And so this is a market that we have been operating in, in a more intense manner. And the speed is below or less than what we would like to have. But anyway, BMG is very traditional in this when dealing with this public, and we have been able to make advances in our share in the origination.

Thank you, João. Now continuing with the question of Olavo. Another question is related to expenses with operational provisions. If we wait according to the portfolio, we show that this has been a significant result. Are we to expect that we are going to continue this kind of thing along the year? Or should we expect any change?

Thank you for the question, Olavo. Here we go. In terms of operating provisions, it has to do with the lawsuits -- civil lawsuits. Yes, there is a seasonal effect into play. In general, in January up to February, you have -- every year, we have the reset of the judiciary branch. So it's a quarter when the lawsuits do not come in high numbers. So if you compare the numbers with the past numbers, what we -- as we observed in the past, so we see when we make these comparisons, a positive trend, not in terms of lawsuits because this is something that has stabilized, but still at a high level. We are still trying to reduce this level. So what have been -- what we have been able to have favorable decisions as we show in our release. So the level is ever higher in terms of successful cases. So the cost per lawsuit is reduced. So in the medium term, we're likely to see this number being dropped. All the work that we have been doing, we have to understand that the result takes a while. We do not capture the results immediately. But this is an activity that we have been putting into practice for some years now. So we are now starting to see the results.

Our next question comes from Rafael Reis with Banco do Brasil. Congratulations on the results. The impact of the regulation on the Basel activities. How is this impacting the growth of the portfolio with the need of preserving capital? Do you study changes in the mix or other strategies. Flavio, could you contribute now?

Thank you very much, Rafael, for the question. In terms of capital, of course, it is a topic that is always on our radar. And here at our bank, we understand that this is not likely to impact growth because we have different levers that we can use in order to bring more capital into the bank. I wanted to mention some on which we have been working. I can mention the lever related to reduction of the portfolio of U.S. portfolio. So this is something that is already underway. So we have already seen the portfolio starting to drop, and it's likely to happen during the next quarters. We have to remember that the main portfolios, be them payroll loan, FGTS, they are portfolios with a lot of liquidity. So I can originate and I can also assign to banks in such a way that I can deleverage my capital balance. As I mentioned, we made a strategic decision not to have this assignment in the first quarter because of the market strength. Of course, the market is stressed in lower interest rates. And so we are going to do that in the second quarter. And we also have the result generation that contributes to increase our results, our capital. And it has an enhanced effect due to the tax credit use. So these are the levers that we use. And at all times, we are looking at the pace of growth, and we need to understand whether we are going to use one or the other lever so that we can balance and reach the level of capital which is adequate.

The next question comes from Marc Ferreira, manager. Considering the macroeconomic scenario, which is challenging, SELC at a high level and the payroll rate. What's the expectation for 2025? What is the bank doing in order to ensure the profitability? Felix, if you could answer that question, please.

I'm going to repeat the question, okay? The bank understands that we have a number of levers to work with, as mentioned. We have the public payroll products. We also have the insurance dimension that also helps us in this leverage. And we have the private payroll products that we are just starting, but we are being very cautious because we're in the beginning and there are still some process gaps, and we have to be very careful, and we have to be very careful and cautious. Of course, this is a challenging market. we are facing. And this is not something new. This is something that has been happening for a while now. The payroll product rate has been pressured. Our efficiency, our mix has been -- and our strategy has been showing, which is to be closer to the client has been shown to be the right path so that we can get good results. I would like to stress once again, we believe that we have an addressable market, which is very -- has a lot of potential. We are a synonym of the category. We're very important in the market. So this is a bank that has been in the market for nearly 100 years. So we have gone through different cycles with difficulties. So we are very well prepared to face those troubled times and reach ever better results. When this difficult cycle is completed, we'll be ready for the market.

Our next question comes from Frederico [indiscernible] an individual investor. Nearly all banks that have already disclosed their results in the first quarter mentioned the private payroll products. Could you provide an update on how you plan to use this product at your bank? João, if you could contribute?

Thank you, Danilo. Thank you, Frederico. The private payroll product is -- has a large market. It's very important to look at that. We have always been enthusiastic to use -- to look at this line in this dimension because it brings along an opportunity, so it's very important to offer credit at better rates because there's the guarantee of the flow and the way it's being proposed to a public that did not have access to this type of offering in the past. Obviously, we are still fine and we -- how to implement and we are facing difficulties to implement to operate, and we are still studying how the return of resources will take place. And from the viewpoint of execution, we are ready to evolve in this line, but we are doing this in a conservative manner so that we can prove that all the flows and all the operational dimensions and the means of payments and everything else would be working properly.

Next question comes from Lorenzo Lima with Evolve Capital. What's the strategy of portfolio assignment? Flavio mentioned something if you could contribute from your viewpoint, João.

In terms of portfolio assignment, I think we mentioned everybody touched upon the topic of portfolio assignment. What we have been doing is a consequence of our capacity of origination. Our capacity of origination is much larger than what we have been materializing in our balance, and we have been taking advantage of this origination capacity. And as new opportunities come up to assign portfolios that would bring positive results to the bank, we are going to do that assignment. And this would prevent us from decreasing our origination force or strength or our activities in the market. So this is something that has been happening in a constant manner. And the proof that we look at the best opportunities and we do the assignments or not depending on the profitability that the assignment operation will bring to us is that in the first quarter, we didn't do the assignment. And now that we look at and see new opportunities, this is something that is likely to happen in the future. And this is how we are going to operate forever.

Next question comes from [indiscernible], Manager. You announced the increase of share in the insurance company. What is the strategy to grow in this segment? Marcelo, if you could provide some color on this topic.

Thank you, Daniel. Thank you, João, for the interest and for the question. I think there are some elements for this growth. The first one is a strong synergy with the Bancassurance to lever this channel, which has high capillarity and has very effectiveness in the sales to a public, which still needs protection. We are talking about a very low penetration level, especially for low-income people. The penetration in Brazil of insurance is very low in general. In addition to the channels, that we have with the synergy. We are expanding and improving our product portfolio. It can be an optimization so that they can become simpler, more accessible and it has to be affordable, affordable for low-income people so that people can protect it, but they can pay for it. And with that, we are diversifying the revenues and generating this growth. An example would be to work on the need that those people to have medicine at a cheaper way in an efficient manner with -- in the medicine, telemedicine. We have a very important thing, which is the focus. Focus is only related to inclusion. This is a big challenge that insurance has, but this is also a great opportunity. So this is the focus of our strategy. It has to do with the channel, with the approach with the language used. I would like to mention the importance of our partners in our channel because insurance is not only in Brazil needs offerings. And we have channels that can provide this offering in a proactive manner, even for low-income people. So this strategy is based on the pillars that I mentioned, and we see a lot of growth opportunities still in addition to the growth that we have already posted.

Thank you, Marcelo. The next question comes from [indiscernible]. In fact, he asked 2 questions. I'm going to ask the first question. Is it a plan internal for the ROAE of 15%? Is it possible to project an ROAE at this level? Carlos, could you provide some color?

Thank you [indiscernible] for this question. In spite of the very challenging scenario, we are not very happy yet with the ROAE that we are offering. Of course, we can and we must go after a better ROAE along the time. I always say this internally, I'm going to repeat. The bank has no shortcuts. It's a continuous improvement activities that we do. I believe we are on the right path to deliver an ever better ROAC. Of course, there are many challenges in the market. There are internal challenges along our evolution, but our aim is to continue evolving and growing our ROAE so that we can reach optimum market levels. So we are going to continue working so that the index can be ever better. And the bank has the potential to deliver a better ROE, but clearly in a sustainable manner so that we can manage to reach the best market practice.

The second question is how the income -- are you going to maintain the distribution of interest on equity? So if you could provide some information about this.

Thank you, Dan, for the question. Yes, our interest is to maintain our policy of maximizing the interest on equity because if I'm not paying the interest on equity, as much as I possibly can. I'm taking resources from the shareholders, and I'm putting the -- in a higher level or adequate to pay for the government. So we -- our intention is to maintain this policy.

With this, we end the Q&A session. I would like to thank you for joining us in another earnings conference call. And I would like to remind you that our team are at your service, and have a good day, everyone.