Banco do Brasil S.A. (BBAS3) Earnings Call Transcript & Summary

Good morning. My name is Fausto Ribeiro, I'm the CEO of Banco do Brasil. Welcome to our BB Day. Today is a very special day. We will talk about our outlook for the future, and this future is inspired by you. So we can ensure the best experience with innovation and sustainability. Today, we'll take a walk through Banco do Brasil. I'll start this broadcast from the top of Banco do Brasil in Brazil. This building is also a very sustainable building, just like our building in São Paulo as well. So it is from within our premises that we will talk to you about our business, our strategies and the paths that we will pursue to be in the future. With me today are all the members of the management team of the bank who are going to present the main initiatives that drive us. We will also have the opportunity to talk. [Operator Instructions] And in the end, I will be back with all of the vice presidents to answer your questions. As you know, I started my administration by launching 10 structuring initiatives that are summarized into 3 pillars: proximity to our stakeholders, innovation with digital in practice and profitability. Our employees are our main asset. They are employees who serve with excellence and dedication every day. They are truly engaged with the company. They share our unique identity based on transparency, ethics, safety and social environmental responsibility. We have heavily invested in training and qualification, especially in digital skills. In addition, talent attraction and retention are priorities for us. We know that relationship is the name of the game. Therefore, we provide excellent specialized in several channels so that our client can have BB present in its business, travels, in the field, in the palm of his hand, at home, by phone or at the branch whenever and however he or she prefers, ensuring proximity is about understanding the different moments in the lives of our clients and making sure that they know they can count on us whenever they need us and -- or better yet, we offer solutions long before they realize they need them. When I talk about being digital in practice. This is much more than a discourse. It means moving forward every day with a banking application that is the best rated by millions of users. It means having partnerships with startups, fintechs and agritec offering solutions that add value to our clients. It means working on bank as a platform and a bank as a service strategies with banking and nonbanking products and services for clients and on clients. It is using the wide and rich database we hold to understand and customized relationships, benefits and businesses growing with the success of our clients in a performance that goes far beyond core banking. In our almost 213 years of history, we have always been leading change. We were the first company to be listed on the stock exchange. We brought the multiple used credit card in Brazil. We were the first to provide services via cell phone, the first via WhatsApp, the first bank to be ready for open banking, and we continue innovating in the most diverse segments in which we operate. All of this never losing sight of what we do best in the market such as agribusiness, payroll deductible loans and third-party asset management. If we want to talk about the future, we need to talk about sustainability. In January this year, we were recognized for the third consecutive year as one of the most sustainable companies in the world by Corporate Knights Global 100 ranking. In this addition, BB was ranked third in the overall score and was considered the most sustainable financial institution on the planet. This is a result of our practices, strategies that for many years takes into account principles of social and environmental responsibility for many years known with the acronym ESG. An important example is the Banco do Brasil Foundation, which for over 35 years, has been contributing to the social transformation and sustainable development of our country with over BRL 2.7 billion invested in social programs in the last 10 years. And we want more. This year alone, we launched 10 commitments for the future, expanding our commitment to that agenda with the intent of supporting our clients and the society to help them be even more sustainable. We do believe in a transformation role that the bank plays and its employees as well to develop and offer products that promote green economy, an inclusive economy that generates a positive social and environmental impact in our society. We also have a very robust corporate government based on collegiate decision making structures with specialized committees and on the segregated functions model. I also highlight that BB is the only financial institution listed on B3's Novo Mercado, which requires the highest levels of governance and implies greater protection to the rights of minority shareholders. All of the initiatives I mentioned and others that you were about to learn about today contribute to the growth of our results in a permanent and sustainable way. We work with innovation, efficiency and sustainability to take care what is valuable to people. Each one is on way and a BB for everyone. So now I invite you to watch a very short video, where we will show you a little bit more about Banco do Brasil and the bank that we are building and where we want to be in 2025. Banco do Brasil in 2025. [Presentation]

I hope you like the video. And it is with this message that we start our tour around Banco do Brasil. And now I would like invite our Corporate Vice President, Mr. Ênio Mathias to talk to us about our cultural transformation. Have a great event, and I'll see you soon.

Thank you, Fausto. Good morning, everyone. I'm Ênio Mathias, Corporate Vice President, and it's a pleasure to be here with you to talk about the present and the future of our bank. Did you know that 90% of the available data in the world was created in just the last 2 years? For this and many other reasons, the impact of technology on the personal and professional lives is undeniable. We used to say that technology would be the future and suddenly, we realize that the present is digital. The technological revolution is transforming the way we live, we work and relate to our clients. To ensure the perenniality of the company, it is necessary to maintain our identity, but adapting it to the transformation we are living through. The company's culture is the culture of its employees and leaders. And Banco do Brasil, our identity is linked to transparency, ethics, security and social and environmental responsibility. These are very important attributes of which we are proud of and fight daily to maintain. But here, we also invest heavily in innovation. We were pioneers in Internet banking. And for years, we have had the banking application that is best rated by users. Our capacity to transform is also one of the reasons that made it possible for this company to become a 2-year-old organization. To be aligned with client and market expectations, we have to develop our digital competencies with the urgency required by today. That's why we invest in the development of our employees. We work on 3 fronts that I consider fundamental, accelerating digital transformation and innovation, integrating the bank's physical and digital channels to provide a unique client experience and offering high performance training to further qualify our staff, value people and increase retention of our talents. To make all of these needs a reality, in May, we launched the evolution movement, which offers opportunities to develop new dimensions in our already qualified staff to develop digital competencies that will help drive the digital transformation and the organizational culture, focusing on the client, innovation, meritocracy and value delivery. With evolution, we offer language scholarships, incentives for undergraduate, masters and doctoral degrees, focus on technology and innovation. We also grant all our employees access to the largest technology course platform in the country, Alura, with more than 1,200 courses. This movement is in addition to partnerships with several domestic and for educational institutions, all integrated through UniBB, our corporate university, which is a reference in education and an international award winner. In addition, UniBB's virtual library had expanded its collection of books on technology and digital transformation. And there are also hackathons and mentoring opportunities planned. To give you an idea of the success of this endeavor, since the launch, more than 60,000 employees have accessed the Alura platform. We have 237,000 courses in progress, and 40,000 employees have already completed 163,000 courses. Another important initiative that began in August was the launch the [ FAZA E ] platform, focused on low code development, which is a development with low coding requirements. Currently, it is not necessary to be training IT to develop software. We are experiencing the democratization of programming with the use of user-friendly platforms and very little or no code and do not demand deep IT knowledge from the user. Studies indicate that low-code is the main trend in technology for the next 3 years. Financial companies due to their strong ties with IT, were the first to invest in this technology with large companies around the world already have a low-code agenda. The great motivation is to increase the capacity to provide services and to amplify the potential of operating efficiency besides encouraging employees to automate their work processes. Since nowadays, everyone has a very close relationship with technology. With [ FAZA E ], professionals who understand a process or business very well can gain more autonomy and agility by developing simple applications that meet priority needs. With this, the implementation speed of new functionalities or improvements is significantly higher. With the spread of the low-code culture, the bank expects to expand its ability to create solutions simply and quickly and to enable the accelerated delivery of softwares that deliver results. The BB's tender, whose announcement was published in June, is another initiative that we will -- that we will renew our staff and replace the inertial movement of the employees leaving the company, mainly due to retirements, which is of around 1,500 to 2,000 people every year. The promotion of this tender competition was mainly concentrated on the Internet in BB profiles on social networks to reach young talent. We posted a record of 1.6 million people who apply for 2,000 job openings, plus 2,000 applicants listed as reserves for commercial agents to work in the business units and 240 job openings plus 240 registered as reserves for technology agents to work in the strategic IT management units. But I -- before finishing, I would have to emphasize another feature, which is very important, and that is diversity. A company with representation and diversity has more opportunities to stand out in the market, increase productivity and make better decisions. Working with people with different backgrounds, experiences, cultures and skills make teams stronger and more prepared to adapt to cultural changes and constant transformations and thus ensure the attraction and retention of talents and the engagement of employees. Banco do Brasil encourages diversity of gender, race, religion, ethnicity and people with disabilities. And to ensure even greater diversity, we are committed to developing actions that promote more equal opportunities for advancement and to achieve greater representation of gender and race in senior leadership positions with the commitment to have 23% of Black and mixed race people and 30% women in leadership positions by 2025. I highlight that our Board of Directors is the only one among large banks to have a woman as a President in addition to 2 other female leaders. Digital transformation does not happen without people. Modern organizational processes, although based on technologies, are all derived from and dependent on human relationships. It is the human side that we'll be able to bring innovation to our processes. We improve our customers' experience and keep our company sustainable. BB has been total -- has been broadly adapting over the years. By investing in our human capital, we seek to improve our relationship with the clients to improve his or her journey and favor the integration of the business. And this is exactly what our VP for Retail Business will talk about next.

For me, accessibility means respect. When I was still working at the branch, I took the sign language course, UniBB, the University of Banco do Brasil, they offer several courses for many different types of accessibility. For employees, there are some adaptations needed within our working space. For people with disabilities, we also have different plans in the bank. We provide maybe an audio device and the acquisition of prosthetics, adapted vehicles, listening devices. And today, I work with several apps from the bank and the technology department serves all of our clients in our population. The greatest reward is to see happiness in the eyes of the other individual and to know that they have who to count on. Accessibility means respecting the individuals, having empathy and to place yourself in the place of that individual. Banco do Brasil is for everyone and for every single Brazilian, for everything you can imagine.

Hello. I am Joao Carlos Pecego, VP for Wholesale Business.

Hello. And I'm Carlos Motta, VP for Retail Business, and we are here to talk to you about what we are doing to increasingly strengthen our relationship with our clients and still remain champions.

Keeping the client at the center of our strategy is a priority here at the bank. And during our conversation, you will see how committed we are to this purpose. Tell us, Motta, what is new in retail?

Pecego, here, we follow the strategy of further personalizing the relationship, using analytical intelligence apply to our clients' knowledge. This generates good experiences and mainly relevant so that we have a bank that is highly specialized in people. We are calling it a bank for every client, and this strategy rests on 3 pillars, hyper personalization, the holistic channel experience and retail trends. I will start by talking about hyper personalization. You know that feeling of familiarity and belonging we get when we enter a place, whether physical or virtual, and we feel that it was made for us, well, that's what I'm talking about. We are working to make each one of our clients feel at home when they get in touch with Banco do Brasil through any of our channels. We make robust investments in analytical intelligence, and we use the best technologies to get to know our clients, who are at different moments of their lives, we want to provide an adequate and personalized experience, which we are calling a segment of one. I'll give you an example. One of our new features is a tool that translates all voice calls into text and analyzes customer sentiment across millions of interactions. With this, we better understand customer needs and evolve our products and services, accordingly. Here, in retail, it is the combination of our investment experts and the use of analytics that allow us to personalize at all touch points, including recommendations driven by insights. With intelligence and technology, we can scale the convenience of advice of all, to all clients through our robo adviser and simulate investments. Thus, they have access to a suggested portfolio of investments according to their profile. Just to give you an example, in the first half of this year, we took another significant step towards serving our investor clients. We made available a structure of 46 regional offices and more than 800 professionals dedicated to providing the best guidance in asset management. They are the ones who provide specialized advisory services to still invest in our clients. I invite you to get to know the new campaign, firsthand. [Presentation]

Our portfolio is complete, democratic and accessible, meaning that everyone in Brazil can invest here at the bank. Our goal is to democratize the access to diversification and investment advice, delivering differentiated profitability. Pecego, tell us a little about the service structures for the wholesale business.

Deepening and narrowing the relationship is our commitment -- rather in retail or wholesale. We recently revealed the wholesale structure, and we made some adjustments. We separated the service to clients with revenues above BRL 800 million from the corporate and large corporate segments, and we concentrated the service to corporate clients with revenues up to BRL 800 million, centralizing the activities related to the promotion of foreign trade and the management of the bank's external network in this area. We introduced an investment strategy area into the private banking unit, with a research team dedicated to the segment further enhancing our recommendations. The global treasury unit was incorporated into our vice presidency responsible for the bank's proprietary portfolio and solutions and derivatives, among other activities, increasing the synergies in the origination of financial solutions for clients in the wholesale pillar. With this reorganization, we seek to strengthen the long-term relationship with our clients, offer products and services aligned to their needs and also increase the level of satisfaction. In addition to the movements in retail that Motta commented on with hyper personalization, we have also worked to improve our knowledge of the client and our relationship with them on the wholesale pillar. For example, BB has been operating for 17 years in the private banking market, serving clients in about 80 cities in Brazil, offering a full range of management services covering equity planning, tax and corporate planning besides family succession, financial management and credit structures. Recently, we turned 8 of the 26 private offices into service spaces exclusively dedicated to very large farmers. And this number is expected to grow this year. This historical vocation of BB in agribusiness combined with a wealth management advisory services of BB private, provides a comprehensive view of advisory and management services available to the business and the family of our clients. Motta, you talked a bit about the structure to serve the investor client. Now tell us a bit more about the lighter service models that we implemented in retail this year.

Well, that's right, Pecego. When we talk about the specialization of the relationship here in retail, we have increasingly expanded the number of clients who can count on the assistance of a dedicated manager, which strengthens satisfaction and results. We are doing this by optimizing human and technological resources which generate gains in scale and more efficiency. In the first half of the year, more than 1.4 million clients we contemplated with this movement, reaching 100% of our digital retail audience. Our purpose here is to provide increasingly qualified services to more clients in lighter models and with more analytical intelligence. All this generates empathy and proximity which are drivers to enhance our customer satisfaction. And speaking of satisfaction, I can't help but remember that evaluating the satisfaction of our clients is a priority for us. NPS is a metric that we follow closely, and growth has been consistent in all niches in which we operate. In addition, we measure satisfaction across all services provided by Banco do Brasil. In the first half of the year, millions of evaluations were received. And the average score in August was 4.8 on a scale of 1 to 5. This makes us very proud and shows that we can and will always evolve. Both the NPS and the grades received in the services provided are linked to the biannual performance evaluation of each and every one of our employees. It is in the proximity and care with our clients that we build long-lasting relationships, strengthened by the mutual creation of value. At the wholesale segment, it is no different. Right, Pecego? So please tell us what are the main drivers for the growth of the wholesale business?

In June this year, we reached a loan portfolio of BRL 180 billion for the middle corporate and large corporate segments. We want to continue growing this portfolio with adequate profitability while maintaining the quality of the assets. Among the guidelines of our strategy is a focus on agribusiness. We seek to increase business along the clients' value chain, offering credit and services to small- and medium-sized companies and farmers in agribusiness, promoting synergies between the wholesale and retail networks. Through agreements and partnerships with wholesale companies, we stimulate and finance the development of their supplier and customer networks, bringing benefits in all links of the productive chain. Another important driver is the origination of business in capital markets and investment banking, which has been leveraged by our partnership with UBS. This partnership combines the expertise in the global distribution platform of UBS with BB's relationship network in Brazil and has already brought very positive results. In the first half of this year alone, UBS BB executed 116 operations with a total volume of BRL 93 billion. We currently have 78 mandates in execution and another 130 deals in the pipeline. We are also working with strategic partnerships in digital ecosystems whether in the provision of solutions in the service rendering space in the sale of the conglomerates product or the granting of credit to the value chain of our partners. We offer solutions in our platform and also develop alternatives to operate in third-party platforms. We have advanced in the digital transformation in the relationship with companies besides developing APIs for all cash management products so that accounts payable and receivable are adapted to the instant payment system, we are developing new business models. Today, we have more than 3,000 clients using our APIs. Now look, how interesting it is. The Pix API has evolved rapidly. And today, it is the most used by clients with an outstanding acceptance in the retail segment since it allows the shopkeeper to receive via Pix in their physical stores or e-commerce network with the proper sales reconciliation process. A great example is the case of a client in the energy industry sector, which made the Pix QR code available on its consumption bills, allowing consumers to have another alternative in addition to the regular channels to settle their payments. Motta, and speaking of digital ecosystems, partnerships and own or third-party platforms, retail also challenges us, how do you see the channel strategy?

Pecego, to deliver value in our retail customer experience, another important pillar is the comprehensive channel experience. Here, I'm talking about the capacity to integrate and to modernize our channel architecture, with new contact and service point formats, whether our own or with partners, we want to offer the concept of omnipresence of channels with the best convenience for our client. In practice, Pecego, we guarantee a triad, reaching the right client with the best solution and at the right moment of life. In short, omnichannel has already become a reality here for some time now. Business is already done with the possibility of the customer or the client starting with service provided remotely or in person and ending with the digital service or vice versa. In practice, this is convenience. Our country is plural, and we all know it, and this requires that we have multiplicity in our solutions and channels to all our clients. We are present in more than 95% of Brazilian municipalities either through our own network or through partners. We have seen a migration of simpler transactions to digital channels. The relevance of human service in financial advice in closing deals and in more complex demands. Complementary is, therefore, necessary for the experience to be more and more fluid. And this is part of the core elements of our decisions. I'll give you the example of loans. In the first half of 2021. About 47% of our lending operations were done this way, using the concept of channel integration. Our employee offers a loan to the client, and they confirm it in the channel of their preference. Another important point in our performance is to work with our clients' value chains, whether they are individuals or companies. The small, medium enterprise ecosystem has evolved a lot in recent years, bringing new participants on board, such as fintechs, acquirers and payment institutions that act mainly as platforms. We want to contribute to the success of each micro and small business we serve. In this way, we will be the driver of this ecosystem, integrating with several ERP companies and also providing our own financial and business management platform for our clients. And soon, we will have new features that we are developing with some fintechs. A good example of an omnichannel process and the value chain is our payroll process. You're going to talk a little about it, right, Pecego?

That's right, Motta. For both retail and wholesale, our process was remodeled and allows the company to open its employees' accounts in a completely digital paperless way, and the individual client can confirm the beginning of this relationship through their mobile phone or at the branch, whichever way they want. We have revised their strategy to be even more competitive in the acquisition and maintenance of the payrolls of our main wholesale clients, offering solutions tailored to the company and its employees. For corporations, we provide agile and efficient payroll management. And for the individuals who receive their salaries at the bank, we offer a complete portfolio and special advantages and credit and services besides differentiated fees. Currently, more than 3,100 business groups process their payrolls at BB totaling 1.6 million employees. Now I want to bring up another relevant point in this conversation. We understand that financial institutions have a significant impact on the conversion to a more sustainable economic model. And as our CEO, Fausto mentioned, we have reinforced our commitments by launching 10 sustainability goals. We prioritize in our financial solutions, the promotion of the transition to an inclusive low carbon economy. In this sense, our goal is to reach BRL 30 billion in certified sustainable emissions, enabling BB clients to raise funds and to invest in businesses with financial efficiency and positive social environmental impact. It cannot be otherwise. Banco do Brasil invests in the development of sustainable initiatives with the origination of green bonds in agribusiness, infrastructure and sanitation projects. In the first half of 2021, we issued BRL 16 billion in ESG bonds. We also tested the first international fundraising. With a sustainable bank securities in Latin America, a sustainable repo of $100 million. This operation was carried out with an international investor to raise funds to refinance Pronaf loans and also to finance the installation of solar panels by companies.

Well, now I'd like to talk a little about trends in retail. To start a greater approach with a young and university crowd, bringing benefits that are at the forefront of the financial system and that go beyond our core. On October 12, we celebrate 213 years. And yes, I am very proud to say that we are an increasingly young company. Here, university students received top treatment. Since the opening of the account, which can be totally digital. It comes with a limit of BRL 1,500 on the card, the highest of the market and in the pace with TikTok, check it out. [Presentation]

Well, I saw some people dancing here, Pecego. In this campaign, we used digital influencers, and it is in all BB's social media, and we don't stop there. Here, university students find support for everything, benefits, advantages and even advice to help them make decisions about their future. By the way, we have a web series, The Future of Work which is on our YouTube channel. Check it out. It is BB going beyond being a bank, talking to our youth about career and the future of work. Still on the subject of benefits, we offer the client the possibility to have cash back of the bills they have paid or have money in the account through the Ponto pra Você program. In the first half alone, they gave BRL 50 million in cash back. This has been relevant and attentive to the needs of our clients. Well, Pecego, we are coming to the end of our participation. And I believe that everything that has been said shows the core of our strategy: customer centrality, And with this, I am sure that we are on the right track, making our Banco do Brasil stronger and stronger.

Thank you all very much, and stay tuned for the next block that will bring a lot of cool information about digital transformation, technology and cybersecurity.

Hello. My name is Alexandre Borba. And in the name of games, I'm known as Gaules. In 2020, I was awarded eSports Brasil Award as best streamer and personality of the year. But my story in the gaming world didn't start yesterday. I've been in this world for more than 2 decades. I started when I was 14, way back when, when I was very young, I started competing. And since then, a lot has changed. This is a computer when I started when I was young. I have a lot of trophies, a lot that I won. And in the journey, I used to be a young boy who don't even have a computer, a boy that want things a little by little. But along my journey built a lot and I needed a partner that would understand my needs and this partner that met my needs was Banco do Brasil. Banco do Brasil is here with me. Look how cool. Today, at the palm of my hand, by clicking, there is an app. One click away, we can make investments, and we can even invest in gaming portfolios, investing. As one cent a month, we can start investing in games. So it's modernity, not only in the computer, but in the palm of our hand. The robot adviser of BB, the investment simulator, bring analytical intelligence to the game. They understand our needs, our habits, our lifestyles, and they propose the most adequate solution. By the way, in addition to all the technology, it is possible to speak with investment experts and advisers via the chat. So we are together in those game. Today, there's a lot more in the BB Day coming up. Stay tuned.

Hello, everyone. I am Janaina Storti of the Investor Relations. And I have with me the pleasure of having with me Marcelo Cavalcante, Vice President of Technology; Pedro Bramont; and Rafael Giovanella, General Manager of Cyber and Prevention in this panel. We will speak about digital transformation. And to start, I'd like to ask you, Marcelo, how do you see BB in the future?

Great question, Janaina. In the future of BB operating beyond the traditional banking business loans, means of payment, et cetera, expanding its operation and generating new revenue streams with a focus on adding value to strengthen our relationship with clients, BB will have a lighter structure, and at the same time, will be more available to the client, operating on a platform that is more and more integrated, which will integrate branches, call centers, the physical and digital call centers and our own and third-party digital channels. So it is this integration of the online and off-line. The bank will invest more and more in the training and development of its employees, turning the employees into true financial advisers. BB will people operate with an expanded concept of the client in a challenging transition, migrating from offline to online. In technology, BB will be totally connected and integrated by adding core processing solutions back end with a focus on the interface and applied intelligence front end. So we'll be moving from the off-line to online but integrating our strengths, capillarity seen in our branches and what is new that we are bringing in terms of technology. These broad qualitative concepts in terms of client service.

Great. Thank you, Marcelo. Now Pedro, considering this bank of the future that Marcelo mentioned. What should be BB's focus in terms of innovation?

Well, the bank's innovative agenda focusing on the growth client experience and operating efficiency and growth. Our focus is to develop new business solutions that would allow us to reach our different markets and diversify our client base. Two good examples of this was one, our Broto platform. And this is strengthening our agribusiness and the gift cards for digital solutions. Apparently, they have nothing to do with the bank, but they contribute for clients to have a certain recurrence in our digital app going beyond natural transactions, such as bank statements, payment and balance. And we also want to contribute on digital solutions. Our focus here is going beyond the bank. In other words, how we help clients strengthen their financial relationship with us and concentrate everything in the same place. One example is BFM, or Business Financial Management, for both individuals and companies, and they will start going live in the third quarter. And last but not least, we want to improve our operating efficiency. One example is our virtual assistance. We have more than 6 million -- 7 million clients using actively our virtual assistant solutions, more than 80% satisfaction, practically all of our portfolio is in this channel. And these are apps that clients already have, WhatsApp, Facebook, that makes the bank be more and more present in the clients' day-to-day.

Excellent, Pedro, Thank you. And with the open banking and data traffic, well, that should increase a lot, I guess. In this context, Rafael, how can BB guarantee the security of its users?

Perfect. Thank you, Janaina. Good day, everyone, security in our channels was always one of our most important assumptions. BB is recognized as a safe bank. In addition to providing full security across our channels, we are very focused on ensuring a fluid experience for our clients. Open banking can be a very recent expression for Brazilians, but BB has been experiencing open banking for many years in 2015, '16, we formed the first partnerships with companies to sell our products on their platforms. Since then, we have been developing all of our security requirements for development and internalization of APIs, more recently during the Open Banking project that the bank has been participating in the working bank -- in the working group for cybersecurity of the Central Bank, where they defined the minimum security requirements to be adopted by all players in the new system. So we are very prepared for Open Banking as well as for the new phase that is coming in the future, open finance. The security that we offer across our channels to clients were also provided to users who come and start transitioning data with us.

Excellent, Rafael. And since we spoke a little about data circulating, could you tell us more about security? Tell us more about the security area and how it operates.

Well, since 2019, the end of 2019, the topic of cybersecurity has become more and more a priority at Banco do Brasil. We are going through a great transformation. It culminated in the beginning of this year with the creation of a unit created to be focused on cybersecurity. This year, we tripled our operating capacity. We invested a lot in tools and new technologies in this environment. And we have implemented and deployed key capabilities to ensure our cyber resilience. I'd like to mention our SOC, security operations center. In addition to reinforcing our staff, our own and third parties and the new technologies, we have also operated with news feeds and flags that circulate across the system so that we can understand and identify what is happening and promptly adopt mitigation measures in case of a possible attack. We also have specialized cybersecurity teams. I'd like to highlight our red teams, what we call ethical hackers, these professionals who are constantly testing our security, trying to identify our own vulnerability before a criminal does. And there's another specialist team that we call blue team that focuses on corrective actions. Blue team is another area that we didn't have before. We implemented it this year. And blue team is responsible for our cyber advanced strategies. Another very important area to highlight that we implemented this year is a dedicated threat hunting team. This team works with what we call cyber intelligence. In this area, we're in close proximity with other cyber intelligence areas both in the banking industry and from other areas. And with this, we can quickly map the new threats, knew how -- know how the attackers are working and thinking and we can prepare our defenses. And lastly, BB invested in a cooperation which we believe is extremely relevant for cybersecurity, cooperating with national and international security entities. Here, I highlight CERT.br, that is center for responding and addressing computer incidents, where we are very active. And the Tentáculos system of the federal police of Brazil. We contribute with information on fraud. It helps the federal police fight cybercrime. I think that there is a lot of cooperation at a national and international level to fight cybercrime.

Excellent. This is amazing. More and more in the financial industry, we talk about the impact and potential of cloud computing. Marcelo, how does BB see this? And what is the current status of the bank in that regard?

Thank you, Janaina. This is an excellent question. I am a tech guy, but technology is not the goal of our company, but it is an instrument we use to make our business viable. We have been investing in cloud computing in a rational way in terms of the advantages it can bring us. We have more than 150 million transactions a day running in cloud computing. In a very rational way, if we get the PIX solution of the bank, it runs fully out in the cloud. But it also runs in what we call legacy systems, our mainframes. The solutions are independent. It's seamless for the client. Sometimes they're operating in the cloud, sometimes in the legacy system. It's seamless. We have a staff of developers, highly skilled developers, to operate in the cloud environment. But we imagine that in the future, we are going to have a hybrid, a multi-cloud, cloud-agnostic, mixing mainframes with third-party clouds. So we are moving in that direction and take advantage of what the cloud can offer, big data, analytics, AI, everything that can benefit us in a very rational way. The coexistence of these platforms is very natural for BB.

Excellent. Pedro, tell us, with this ecosystem, how can the bank remain relevant in such a fluid and interconnected environment?

Well, this open finance environment, in our opinion, favors Banco do Brasil. As mentioned, Banco do Brasil is safe. It is recognized by the Brazilian population as safe. As Marcelo mentioned, the bank extracts the benefits of emerging technologies and we are in the forefront of adopting these technologies. Our strategy to operate well in the open finance environment will be based on, one, a great focus on our strengths. We are market leaders in a number of business solutions. And these solutions will increase our distribution channels, connecting with digital third-party platforms. Secondly, with method. We have 3 venture capital funds that will help us look for partners solutions, which added to our own solutions will increase our relevance. And the third point, of course, it could not be different. We have an ongoing innovation agenda to meet the needs of the country.

Great. Thank you. This has been amazing, having you on board and learning more about the strategies and the initiatives that will underpin business generation in the improvement of the client experience at Banco do Brasil. Now we will talk about agribusiness. And I would like to call our Agribusiness VP, Renato Naegele.

Thank you. Hello, everyone. My name is Renato Naegele, VP of Agribusiness, and it is with great pleasure that I will talk a little about BB's initiatives in the agribusiness segment. Banco do Brasil is the biggest partner of the Brazilian agribusiness. The history of BB has always been intertwined with the history of Brazilian agribusiness. And we are very proud of such a solid and fruitful partnership over the years. According to IBGE, the agribusiness GDP between 2011 and 2020 grew 25.4% and totaled BRL 1.9 trillion. Of everything produced in Brazil, 1/4 comes from the countryside in the agribusiness production chain. In July of this year, we launched the biggest crop plan of all time with BRL 135 billion to meet the needs of the agribusiness, and we have already made available another BRL 10.5 billion for investments in storage, technology, renewable energy and recovery of crops affected by the recent frost. These resources reinforce Banco do Brasil's protagonism and leadership throughout the agribusiness value chain. At Banco do Brasil, more than offering loans, we are side by side with farmers to know the reality out there in the field, to know the needs and potential of our clients and thus to offer solutions with assertiveness and agility. We have a rural technical advisory network made up of more than 220 professionals trained in agricultural sciences, all of whom are employees of the bank. They provide consulting services to our clients in order to increase agricultural production and monitor and guide the best application of resources in the finance activities. We also have a network of branches specialized in agribusiness. But more importantly, in all BB branches, we have trained employees who knew agribusiness and therefore can fully serve the client. We operate in the entire agribusiness ecosystem from small family farmers to large producers, including cooperatives in agro industries. We have aggregated the use of artificial intelligence to human consulting. An example of this is Agrobot, Banco do Brasil's virtual agro consultant, which provides information and customized analysis for the optimization of farmers' results and delivers valuable tips and helps to choose the best times to market your production. The Agrobot virtual adviser is currently available for several crops, corn, soybeans, coffee, cotton, wheat and rice. Digital is now part of Banco do Brasil's day-to-day agribusiness activities. We already have the following products available on mobile devices, BB Giro Agro, Agro Digital Investment and Digital CPR, the latter being a new way to finance agribusiness and evolving significantly in recent years, all available in the palm of your hand. Using a smartphone, it's possible to contract the loans and documents by rural life insurance in addition to following each phase of the contracting process, electronically sign the contract and receive the credit on the checking account with convenience and safety. In July 2020, we launched together with BB Seguros the Broto portal, broto.com.br, which is a digital ecosystem for agribusiness in which it was possible to connect farmers, service providers, distributors and suppliers in a single place. Since its launch in July 2020, more than BRL 900 million in business deals have been closed. We have more than 500 partner companies registered, and we have already exceeded 320,000 access to the platform. In the search for new technological solutions, Banco do Brasil has been prospecting businesses with start-ups. We have evaluated more than 50 agritechs, and we seek to invest in solutions that provide improvements for our clients inside and outside the farm gate and bring more efficiency to our processes. Thus, Banco do Brasil is on its way to becoming the main digital ecosystem for agribusiness. The bank is also advancing and structuring businesses to raise funds through the investment funds of agroindustrial productive chains, [ fee agro ], expanding and diversifying the sources of funding for the agribusiness. We are the strongest bank in agriculture, and we will increase our business with CPR, strengthening the ties between co-ops and also all the producers supporting the agribusiness, providing structures in capital markets to put together the field and investors, fostering CDCA investments and green bonds, all market tools that are crucial to -- for us to understand the need for resources demanded by agribusiness. In addition to credit, we will expand the protection and the livelihood in the field. We are the strongest bank in agribusiness with over 54% market share and a portfolio of BRL 206 billion. Of this, BRL 102.5 billion account for sustainable business. We support the Brazilian agribusiness to continuously improve its activities, increase productivity with practices to preserve natural resources and the quality of life for rural workers. At the beginning of the year, we launched 10 commitments for a more sustainable world with targets up to 2030. Of these, 5 are directly related to agribusiness. And I would like here to highlight the goal of reaching by 2025 the balance of BRL 125 billion in support of sustainable agriculture. At Banco do Brasil, we believe in the capacity to develop and offer products and services aimed at a low carbon and inclusive economy, which can add more and more quality and innovation to customer service and also promote less social and environmental impact. You can count on Banco do Brasil. We offer our clients innovative experiences, lasting solutions, long-term partnerships and sustainable business while remaining highly competitive. It is the largest agribusiness partner of all times, contributing to the sustainable development of Brazil and food security of several countries. Thank you. [Presentation]

So we are back, and it's a pleasure to talk about how sustainability and technology have enabled our business. Here with me, I have Paula Teixeira. Paula Teixeira is VP for Risk Management; and Antonio Barreto, VP for Government and Sustainability. Good morning.

Good morning, Janaina.

Well, it's very nice to have you here with us today. Thank you. And to start, Paula, can you please tell us how technology has changed risk management at Banco do Brasil?

Well, it's very good to be here. I'm very happy to be here and talk about advances in technology, the use of data within the bank. And the bank has been making massive use of analytical intelligence to improve decision-making process. Since 2017, we started our journey incorporating the use of data in our analytical models, our statistical models and mathematical algorithms because we are now enriching all of the traditional models of credit granting with the use of analytical intelligence and data. And with that, we can improve and anticipate behaviors. And by the same token, we can improve credit granting with a very specific look at every one of our clients. So in terms of how we use the data and the improvement of the entire structure and the governance of our models, last year -- during last year, we deployed a new methodology that we call resilience matrix. What is the intention of this methodology? And what are the innovations? We try to understand and, through these data, we try to learn what sectors of our economy could benefit from that or sectors that would have some difficulties considering the current moment of the pandemic, which we are still experiencing now. So based on that matrix, when we look at the risk of the client and all of the aspects as well as the risk that the environment is bringing, all of the macroeconomic variables and microeconomic variables in this context, once we trust the data, we were able to not only have a better perception per segment but also, we could go to the very individual level per company. And by doing so, we were able to anticipate movements. We could be more proactive with our clients. And we can even offer loans or a solution to somehow give them the possibility to solve a problem of, let's say, cash flow. With all of that, we were able to have a more holistic view of management. And based on that, we also saw some positive effects in terms of delinquency. Since the first quarter of 2015, the hallmark of 1.86% in June of 2021 is our best number ever, and this really comes to prove the assertiveness of this methodology. And this is a proprietary model. And it has indeed helped us to evolve in our risk management as a whole. And with all of the provisions that we have, I mean we have prudential provisions throughout 2020, and they were focused on that because through our resilience matrix, we were able to anticipate what were the sectors, companies and clients that could probably be in a very critical situation, and then we were able to anticipate the risk. And by doing so, we could go through this period in a much more comfortable way. And this result reflects in the sustainability of our portfolio. Well, these are just some examples of how can the use of analytical intelligence help us to improve our risk management portfolio and be more assertive.

Well, that's very nice. And as you talked about credit management, one of BB's differentials is the sustainable credit portfolio, which in June has reached BRL 258 billion. And Barreto, you were the executive responsible for the sustainability theme at Banco do Brasil. So I would like you to comment a little bit about the bank's role in the promotion of a more sustainable economy.

Well, first of all, I would like to thank you for this moment. Paula, I'm not going to remove my tie. I feel very, very well like this. So I'll keep my tie. It's important that we talk about the sustainable portfolio of the bank, not only thinking about what lays behind it. I mean BRL 258 billion, 36% of our credit portfolio has a positive externality, and that just shows that the bank is moving towards a sustainable path in all segments. It's also important to remember that we are not only using our own taxonomy. The bank looked outside to find like a second opinion. And by doing so, the bank shows to the entire society and all of our stakeholders saying, "Okay, investors, there is no other portfolio that is more sustainable than ours." And this puts ESG in practice. So more than talking about the volume of our portfolio, we should talk about what our portfolios can do because we can help small, midsize and large corporations because ESG and sustainability is present in all of these segments. It's present in the country, state, municipalities. We have a very clear strategy so that on the one hand, we have the transformation of our portfolio. And with that, we can help our partners also navigate through that. So on the one hand, we have credit. And on the other hand, we have investors. A clear example is just to show a concrete action that we did on renewable energy. That was very recently in May. Our structure and our communication channels helped us to really see that BRL 200 million were irrigated or spent in a single month. And this just emphasizes the fact that we are focused on the energy grid. And this is also impacting individuals because we are just indicating that we will continue to grow that portfolio. In the first half of the year, we invested BRL 6 billion in that portfolio. And the target is to reach BRL 15 billion by 2025. I mean BRL 15 billion, we already spent BRL 6 billion. Maybe we were not daring enough. I think we have great capacity and I think we can go much further. Now if we look on the investment side, we diversified our investment portfolio. And by doing so, we are serving the needs of those who are concerned because the society is evolving. But by the same time, we are really mindful of the environment, social and governance. And people are now investing in assets that the bank can offer that really have all of the ESG attributes. So that's why we have BRL 20 billion for 2025. That means that we will triple our portfolio by 2025. But again, if we were just talking about BRL 6 billion and I want to reach BRL 15 billion in 2025, increasing our portfolio by threefold, is it going to be a difficult task? It may be for some but not to Banco do Brasil, I'm sure, even considering all the tools we have available to our investors. We have a very diversified portfolio, different products and certainly products with this social and environmental bias.

Now speaking about the demands from society, we see that there is a great demand in terms of how companies are dealing with environmental and climate change risks in their operations. And I would like you to talk a little bit about that, Paula.

Well, Janaina, it's part of our corporate strategy, as Barreto just mentioned. It's part of our strategy to be part of one of the largest sustainable companies in the world. For that reason alone, we have been winning many awards on sustainability, which really explain our strategies and how we've been pursuing this entire context. Now when we look at our loan portfolio and we then look at all of these things that we have been talking about, be it in terms of climate change risks, social risks and environmental risks, we just realized that our loan portfolio is very much based, supported and validated, I mean, because all of our loan operations, they follow a validation process and environmentally a validation as well in our entire portfolio. But how is that possible? Well, it starts from looking at issues related to environmental licenses, issues related to the fact that the companies with whom we are working with, they are not part of any black list and they are not involved in deforestation cases. And including -- we also consider the Amazon biome. So with this backdrop and all the work that we do, which is data-driven, data-driven is something crucial for us. We are even using that in our applications and registration of clients. So when clients apply for a loan, they have to prove that they are not related to any environmental issue or crime. And this is part of our everyday operation in our -- and it reflects in our portfolio. And that also includes other mechanisms that are part of our credit mechanism. Barreto was just saying that we want to work with companies to help them grow. But let's say if we rent credit to a company but -- throughout that period, our tools can also show us situations that allow us to block that resource in the event of the client not complying with the current legislation or not be compliant with some of the guidelines of the bank. So we have all the necessary tools to allow risk management to be effective. With all of that and considering our current context, we have to constantly evaluate our models. And the bank is now getting prepared to also apply a rule of climate sensitivity. And with that, we will try to adopt a strategy whereby risk -- I mean we try to mitigate physical and transition risk, looking at the climate context and what is part of our loan portfolio. And I think and I have also to mention a practical example of best risk management practices, and that refers to our agribusiness portfolio. All of our agribusiness process is closely related. I mean this business is closely related to issues of environmental risk, social risk and climate risk because this is part of that business. And crop season after crop season, we have applied all of our metrics, mitigating risks. And by the same token, we were able to expand that portfolio in a very profitable and sustainable way. Would you like to add anything?

Well, it's difficult to add after everything you said. But I would say that when we think about ESG and when we think about what we can do in terms of something that is not a fad, is not a trend, far from it, but it's possible to identify that risks are present in the lives of every individual. So every one of our client, they try to understand better how to manage their risks. And this mirrors our reality. We do that in our institution. That is so true that during the World Economic Forum, when they talked about global risk, we just realized that every new report, the world leaders are becoming more and more concerned about this topic, be it in terms of climate risk, as Paula just mentioned, but also in relation to any other governance practice and how the other risks will evolve. And it's no different in Brazil. And we do have a very specific metric for this in terms of new tenders. There is just a new resolution about that because we say climate risk is welcome to the risk component of our portfolio. BB, with the agribusiness portfolio and the magnitude of this portfolio, we are very mindful of agribusiness. And our portfolio is very good because we did our homework whenever we analyze risk in our daily activities. And we monitor that very closely. This is not something that I only look at what is happening outside or at the Central Bank. But we also look at how this is impacting our own organization in terms of responsible lending. This is part of our DNA. This is part of our reality. Especially considering an organization that's almost 213 years old, we are concerned with long-term sustainability.

Excellent. And as we were just saying, the bank was acknowledged as one of the most sustainable organizations in the world. And I think the bank continues to work to remain relevant in this agenda. But how is the bank doing that?

I think that how is always a very good question. How do we do that? How did we get there? Well, I just talked about our 213 years of history. We are not this taxpayer number for nothing. We are the #1 taxpayer number. And we follow on a trail of development. Every day, the economies are becoming more global and there is a new resection between the different economies of the world. It's important to look at what is happening outside so that we don't make the same mistakes in our reality. So we are a very long-lasting bank, and we have been ranked as the most sustainable bank in the world by the Corporate Knights Global 100 2021 ranking. And that's not for nothing, and we are the most sustainable bank in the world. So with recurrent profit as somewhere, it is right here. But it's important to look back because since 2005, we started to pursue our Agenda 30 BB, which has been evolving. More than 500 actions have already been developed, and that is what allows to follow on that sustainable trial. Are we going to stop right there? No. We have to evolve, and this evolved with new commitment. And that's when we launched the 10 long-term sustainability commitments. We looked at this ESG agenda, and we established targets that -- to be implemented by 2030. We will not stop right there. We haven't stopped, and we will continue to evolve. Based on 3 important keywords, everything that we can transform is state of the art. But before transforming, we have -- we did our homework. I have to reduce what causes damage, and then I compensate for those things that I cannot reduce the damage. And from outside in, I share my knowledge and I help to transform the lives of those who borrow money or those who invest in our country, particularly when I have products and services, when I look at the investments from people who think environmentally positive. We still have a long way to go. We talk about GHG gases. We talk about promoting diversity. We talk about improving and evolving our energy matrix to have a cleaner matrix. And so all of the governance elements are present in our ESG model. I mean we received that award 3 times in a row, and this increases our sustainability goal. Because if you're at the top, you just have to remain at the top.

That's great. So this session is approaching an end, but I would like to ask you just to conclude, Paula, if you could comment on BB's credit strategy, combined with capital optimization for the current data-centric context based on the information economy.

Well, what we see is that our strategy is focused on the intensive use of data. As I said before, when I refer to the use of data and the growing -- the building of our resilience matrix, through innovative solutions, we try to give our relationship managers a previous evaluation, and that evaluation gives them a better view about the current status and the moment of decline so that the credit solution can be more assertive. So we use all of this analytical intelligence and data that helps us, together with our relationship managers, better serve our clients because we look at them and we can suggest better solutions that are -- cater to that moment. And sometimes, we can even anticipate the moment. And this is what we do when it comes to predictive analysis and provisions. I can anticipate those moves, and I can anticipate their needs and then serve my client much better and even anticipating a problem in their cash flow because the more information I have about the client, the better I will be in terms of presenting a solution that is better suitable for the client and the company. And then we have assumptions. We get credit looking at the risk and the return that this risk will give to us. So with that, that's something we've been doing on a constant basis. We are constantly reorganizing our growth -- our NII. And this is what we've been doing, and this is what we always did so that we can put the bank in a position when -- where results will be reached in terms of providing returns to our shareholders, to our society and also providing soundness. It's important that we have a sound bank, a bank that is balanced. Capital is here, and we are allocating this capital based on data-driven -- so soundness and sustainability and the profitability of the company become a priority.

Thank you. Thank you very much. This has been a very enlightening panel. And I am sure that our audience was very pleased. I would like to thank you. And so now we will go to our next block with our CFO. So now the floor is yours. [Presentation]

Good day, everyone. I am Ricardo Forni, VP of Investor Relations and CFO. And today, I'm going to talk a little bit about some efficiency and innovation initiatives in our business. As we already mentioned, BB has been making several movements that pave the way to a future with even more sustainable business with quality service to our clients and profitability for our shareholders. The use of digital solutions has been consolidating in our client base, and our value proposition is to deliver services that integrate personal contact with digital ease, further deepening our relationships. The design of our service channel is guided by the behavior and preferences of our clients. And thus, we have improved an integrated physical and digital capillarity, which offers convenience and practicality for our clients. We developed a new managed service model for clients with high digital maturity, what we call light offices. These are structures that have specialized relationship teams that adopt intensive use of technology, allowing for a greater number of clients to be served per manager. A light office brings a service capacity per employee that is up to 220% greater as compared to a traditional unit. With this, it was possible to increase the number of clients with a managed relationship. Our priority is to be closer to our clients, and technology has helped us with that. Another aspect of this digital revolution is greater cost efficiency. For example, the cost of serving in the light office, which makes intensive use of communication through remote channels, such as chat and WhatsApp, is up to 3.5x lower than a traditional channel. With this, we gain in scale and profitability, generating greater efficiency and at the same time increasing client satisfaction with a model that is more adequate to their profile. BB is becoming an increasingly lighter and more agile bank with physical coverage in 95% of Brazilian municipalities. We have expanded the number of bank correspondents and partnerships in the Mais BB network, increasing our capillarity with efficiency. Besides making banking services available to the population, we contribute to income generation for local communities. To take care of what is available to people, we cannot fail to observe the environmental issue. Therefore, the BB has been investing in energy efficiency and in changing its consumed energy matrix, increasing the share of renewable sources. We are already consuming energy generated by 2 solar plants, and another 8 renewable source plants are under construction. Besides this, another 19 will be made feasible to be tendered this year with the goal of supplying 23% of BB's consumption via renewable sources by 2023. As of April 2021, we will offset 100% of the emissions related to electricity consumption, a total of 532,800 megawatt-hour. With this, BB has neutralized the emission of 33 tons of carbon dioxide gas, and we are committed to go further and reduce greenhouse gas emissions by 30% by 2030. We installed IoT solutions, Internet of Things, in 230 branches during the first half of the year alone to monitor our air conditioning, [ break ] and lighting systems in addition to electricity and water consumption. With that, we want to achieve a 15% reduction in power consumption in the premises served. The expectation is to expand the model to a total of 300 business units by the end of this year. All these measures bring savings with a smaller environmental footprint. Another front that we are working on related to efficiency is the improvement of the pricing process for credit operations through the use of data, making the offer more assertive, personalized and agile. Credit pricing was integrated to the bank's analytical intelligence environment, which enabled the development of predictive models, including machine learning. And we are going further. We are testing, in a lab environment, a fully digital solution for pricing individual loan operations based on a structured algorithm, taking into account variables such as feedback from prior business and competitor operations as parameters to defend the best price for each operation. This type of solution gains even more strength in the context of open finance, adding a wider range of data for a more complete evaluation and offers. BB invested heavily to enable the necessary development across all phases of Open Banking, and we were the first bank to go through the complete journey of data consent and consumption in Phase 2. We already have more than 2,800 legal entity clients integrated in using our services through APIs, enabling new business models. These clients also count on the support of a team specialized in cash to help analyze their business and propose solutions. Our proposal to our shareholders is to continue delivering a return on the capital invested in our shares, and we are working relentlessly to improve our cost structure on several fronts with innovation, quality and convenience. At the same time, we have been investing in new sources of revenue generation using technology. This is a process of constant improvement. We are clear about where we want to get and are certain that we are on the right path, bringing increasing returns to our shareholders, promoting the best experience for our clients and making a positive impact on society. Thank you very much for participating in our event. And I will join my colleagues of the management team so we can start the Q&A session. Thank you very much. [Presentation]

And now let's go to our studio to meet with the VPs to answer your questions. We have 6,700 people connected. Thank you very much for making time for us. Hello everyone, Marcelo, Motta, Ana Paula and all of the others. Now that you have seen a little bit of our facilities and could get to know what we are preparing for the future of Banco do Brasil, I have with me all of our VPs to speak with you. Daniel Maria, General Manager of Investor Relations will be coordinating this Q&A session directly from Sao Paulo. Good day, Daniel.

Good day, Fausto. Good day, everyone. Thank you for joining us this morning. During this event, we got more than 400 interactions. And what did we do? Our IR team is working to consolidate the best topics for -- in the best questions. So let's start, Fausto, with the first question. The first question is related to corporate governance. It was asked by a couple of people. Mr. Nicolas Mason, Marco Antonio Miranda, Jose Antonio Bento, Arturo Fiorini, Jason De Castro, among others. And the question is, how is BB protecting from a possible political influence in its decisions to allocate capital?

Excellent question, Daniel. Well I'd like to start answering this question, reminding you that Banco do Brasil has a sound corporate governance process and with a long-term view. We have strategic not approved in a collegiate fashion by all technical committees of the bank. And the process is bottom-up. Most of the members of the Board of Directors of the bank are also independent, and they are committed to the best corporate governance practices. Another point to highlight, Daniel, is our decision-making at BB. This is a process that no one can make on their own. These are all collegiate decisions made by structure of committees. Lastly, another very relevant point that can be easily proven in terms of excellence of our governance is the fact that Banco do Brasil joined the Novo Mercado of B3. And that happened in 2006. That makes it compulsory for us to implement the best corporate governance practices.

Let's move on to the next question. Perfect. The next question is related to finance and valuation. It was asked by Mr. Haggis Stavisky, Juliano Fragias, Sergio Gonsalves, Eduardo Tissera, Daniel Portola, Fernando and Anne Alexi. And the question is, what justifies BB's discount vis-a-vis its peers? When can we expect the recovery in this discount? What is the payout expectation for 2021 and 2022, particularly considering the potential impact of the potential tax reform that is being discussed at Congress?

Thank you, Daniel. To help me with this question, I'd like to invite on stage our CFO of BB, José Ricardo Forni. Forni, please join me.

Well, to answer this question. Well, I'd like to start thanking you for the question because this is a very relevant topic. In our view, the current price does not reflect our ability to deliver growing and consistent results at BB. We currently deliver a return close to 15% per annum when our peers perform in the range of 17% to 20%. And we continue to be committed with reducing this profitability gap. Currently, the price multiple on profit has a 50% discount compared to our peers when the historical average is 25%. The price multiple on equity is around 65%. And historical series is 40%. So the multiple is way higher than our historical behavior. And this high level of price discount makes BB's shares to have a dividend yield greater than our peers. I take this opportunity to say that I want to stress our relentless commitment to increase efficiency and profitability compared to the private peers, and we are working to deliver these results in a sustainable fashion. Now regarding dividend payout, remuneration policy was 40% of the result for this year, maximizing the fiscal benefit of interest on own capital or JCP. As for the tax reform, we are closely following how it's being discussed at Congress that can extinguish JCP in 2022. The reduction of it can reduce tax credits in 2021. However, we need to wait to see what's going to happen regarding potential impact. So as for dividend payout for next year, we have not defined at the Board of Directors the percentage of dividend payout. We'll assess the potential impact of expected events such as the tax reform and the schedule to reduce IHCD regarding our principal. I think this is what I had to say. And I think it is important to mention that the tax reform is an important topic for the economy as a whole for the government. However, it affects all of the financial system of Brazil. It doesn't affect only Banco do Brasil.

Thank you very much. And Daniel, you have the floor. Let's move to the third question. Thank you.

Fausto, our third question is related to sustainability and ESG practices at the bank. It's impressive how this topic is gaining relevance. And the number of questions related to that, that we received some questions from Mr. Leandro Santos, Jovan Yao, B. Paulo Canesi, Isaura Haze, among others. And their questions are -- well, a good deal of the questions have been addressed in the presentations made, but they would like you to elaborate on how Banco do Brasil is structured to address the sustainability topic.

Excellent topic, Daniel. I'd like to invite my VP, Antonio Barreto, that deals with government and sustainability at BB. He will help us clarify what the bank is doing regarding such an important agenda. Welcome, Barreto.

Thank you, Fausto. Thank you, Daniel. It is great to be here in this kind of event. Thank you for the opportunity. Well, firstly, it is important that we try to stress what we mentioned. We spoke a little bit about E, S, and why not talk about G. I spoke a little bit about the environment, the social aspect and a little bit about our contact with the regulator. I spoke about positive externalities of our loan portfolio and our investment in products and services. And we spoke about a representative share of BRL 258 billion in a sustainable loan portfolio announced in the closing of the first half of the year. Now let's talk about the how. How did we get this far? And how have we been working with sustainability? It is important to say that in almost 213 years of our history, our institution has sustainable in our DNA. A lot has happened in the world. But we always dealt with changes in the market regarding sustainability. Can we talk about the main index, the Dow Jones Index, and how do you see this? 55% of the index is directly related to economic factors. So how does the bank deal with that? We deal with that with an element -- a basic element, saying, "Today, we commit to do today better than we did it yesterday." Just like the index does. They look for best practices in the world. Sustainability is included in our strategy, and our strategy permeates the short, medium and long term. We have a dedicated team, this dedicated team facilitates a coordination of actions across our institution. And more than that, we can say that each one of these actions are connected, strategy, tactics, and operations and our agreement of work, so that every one of these actions implemented by our more than 80,000 employees. All ESG actions in the bank are coordinated by a structured plan that started in 2005, and is now in its eighth edition. This structured plan generated more than 500 actions, and made us be recognized and receive national and international awards. This process to build the sustainability plan is considered a benchmark around the world. People see megatrends, and we extract these megatrends involving all of our stakeholders to have a more accurate and relevant mapping involving everyone, including the perception of society. In our last planning cycle more than 15,000 different sources, clients, suppliers, regulators, were involved in building this plan. Sustainability at BB is followed by senior committees. We do focus on this, and we report to the Board of Directors. This is how we maintain our commitment to adopt the best ESG practices for more and more sustainable bank. And why not say for a better and better world every day.

Excellent, Barreto. And I would add something to what you said. The importance of banks and of the financial system to help our clients make this transition to a better world. I believe that Banco do Brasil can contribute a lot in that regard. And we will do so. Daniel, over to you.

Thank you. Fausto, another topic that has been raising a lot of interest. And we have a number of questions linked to this, i.e., agribusiness. We consolidated some of the questions by Mr. Jose Amir, Mido King, Chet Ricopenia, Roman Marcus, among others. And talking a little -- the questions have to do with Banco do Brasil and they're linked with the grid business. BB is a leader in agribusiness with an increasing competition, not only by banks but also by fintechs, how does the bank intend to maintain its leading position?

Perfect. Well, to help me with this question, I would like to invite on stage or agribusiness VP, Renato Naegele. Renato, please join me.

Hello, Fausto. Thank you, Daniel. Well, that was an excellent question for an excellent BB Day. I will borrow what our CEO said. He says that competition is healthy. Competition is positive. And I explain why. Because there's a growing agribusiness demand. It's an exponential growing demand in terms of products, animal protein and food security in Brazil and abroad. Thus, competition means more resources to support the Brazilian agri business. But here at BB, we are leaders after the farm gate. And we want to increase our action in the value chain in the farms, separating commercialization, sales, industrialization and support to export these products. And before the farm gate in the chain of inputs for its alliances, production of seeds, bio inputs, it's BB stronger in the agri business, acting in the production chain -- the value chain. For that, we have 3 pillars. First, more resources to the agri business. The crop plan with our own bank resources and particularly market resources. In keeping with the new agribusiness law, we increased the amount of products in our CPR, we are investing strongly in developing CDCA. And now the fee Agro, it's an investment fund, in agribusiness chains. Second pillar is BB agri digital, agribusiness on the digital ecosystem of the bank. For that, we have Broto, broto.com.br, which integrates business management knowledge. Pedro Bramont, our digital business VP, mentioned this is a very important tool to make Banco do Brasil the biggest digital agribusiness ecosystem associating digital solutions of the bank and partnerships with agritechs. And the third very important pillar is simplification and operating efficiency. In other words, having operations that are easy, fast and more economical for clients and bank alike. With specialist agribusiness service from small family farmers to large farmers, specialized support to cooperatives and agri industries. So across all service channels of the bank. This crop season, we have good numbers because demand is very strong. We already reached out to over 4,700 municipalities. We have over 140,000 transactions and millions of reals in operations. So we continue to grow and by growing, BB will be stronger throughout the agribusiness chain.

Excellent, Renato. That was a very good view. Agri is the vocation of Brazil. And as we usually say, a stronger Banco do Brasil in agribusiness means that Brazil will be stronger in the world. Well, Daniel, what is our next question, please?

So going to our next question. Well, it's interesting because this is a very trendy topic. And I have been talking to the market about this topic a lot. And the topic is digital transformation and this change in the competitive environment. This question combines a question from Paulo Hico, Viera Escapone, Mr. Jackson Leon, Daniel Brand, Emanuel Almeda, Adam Santos, Julie Matte, Jose Almira, among so many others. The question is, what are the bank's expansion plans considering open banking and open finance. And how is the bank seeing the competitive scenario of incumbents and fintechs.

Excellent question, Daniel. And to help me with that topic, I would like to call Mr. Marcelo Cavalcante, our IT VP. Marcelo, please, you have the floor.

Thank you. I know that this -- I saw this question coming, open banking, open financing, well, digital transformation is a hot topic today. I mean fintechs, new entrants, et cetera. In terms of open bank and open finance, well, certainly, this is one of the major challenges probably in the history of the Brazilian industry and Banco do Brasil is ready, is ready to grasp all the opportunities that we already mentioned. Vice President, Paula, already talked about our analytics intelligence. So we are applying analytical intelligent, machine learning, big data, behavioral experience. I mean new technological tools that can certainly help us to compete in this market. But of course, to work in this new environment, technology alone is not enough. Then we also talked about training our people, training them through Alura and Evolution platform. And we still have a program called BB Data Driven. And the aim of the program is to lead Banco do Brazil to be a totally data-driven company. And so we break with some myths and we democratize all of this topic. And this is a course that is open to all of our employees, be it through Alura, taking shorter courses or even in lengthier courses that are also provided by the bank. But to support this evolution, we have to have an environment that supports all of these tools. As I said before, we are heavily investing in cloud processing. And also, as I said before, we use a hybrid cloud, public, private on-premise, outside the bank, they are all integrated with our mainframe structures in our legacy system, and we are trying to modernize our legacy systems. And in terms of what's possible and not. I already talked about pix, which is a very robust solution, meaning that there are a lot of things happening.

Now in terms of fintechs, Renato already said that we are investing in agri tax, in fintechs from agribusiness. So we have investments in fintechs, agritechs and other investments centered in centralizing the client or being client-centric. There are lots of things happening. I'd like that view from the Gartner Group that splits that challenge in 3 major pillars. One is what you said, the cultural transformation of the company, which is the first pillar that we have to change the mindset of our employees so that they can be very much tuned to what is coming, which is digital. And the second pillar is to optimize what we already have, meaning taking all of our products and service, those that we already have at the bank, to the digital space so that we could have a better flow with our clients. And certainly using all the tools that you mentioned, bots, machine learning, et cetera, we want to bring what we have to our digital environment so as to be totally transparent to the guide. And the third pillar, which I think is our major challenge, and that is transformation. We have to take advantage of all of the opportunities that are being brought about by this business, the bank as a platform, bank as a service, meaning that there are many challenges that are part of this transformation. New business models will arise, and we have to take advantage of those to generate new revenues. Certainly, in the digital platforms, we mentioned Broto oftentimes, but there are many new things coming. If you are a client of the bank, just wait in October, we have a lot of new things coming our way. So Daniel, again, you have the floor.

Great. Thank you, Fausto. We have another question. This is a very interesting question and is related to the capillarity of the platforms and the service models that we mentioned before. This question is from Eden Pascal Murillo and Isabel. Among all of the digital interactions, how does the bank see the future of the physical branches and its relationship with the clients?

Perfect question, Daniel. To answer the question, I would like to call our VP, Carlos Motta. He is VP for Retail business. Welcome, Motta.

Well, thank you, Fausto, thank you, Daniel, for the question. This is a very important topic. Fausto, this is a very important topic in the industry because it's present in all of the largest Brazilian banks, and Banco do Brasil is the main protagonist of this topic. More than 5,000 points scattered all over Brazil and present in 95% of Brazilian municipalities. And for us, we have to take into account 3 elements: the number of branches, the most adequate capillarity, and most importantly, the type of branches. And the client -- our client will decide on that. The behavior of our client is changing every day. And throughout this behavioral change, there are 2 core elements that drive our strategy. Number one, the most simple and most frequent transactions will still be done through the app. And this is an app that has been highly ranked by our users. And the second topic is financial advice -- business advice. This has become more and more relevant to our clients. And this shows that we are on the right track. We already inaugurated several branches and several specialized business points. Agro branches, micro and midsized companies, Estilo, and the light offices. With all of that, we can expand our expertise. This year alone, 1.4 million high retail clients now have a dedicated client -- manager to serve their needs. And this is changing the face of the bank. We are having a lighter network closer to the client. We have a personalized service. And all of that to have a unique experience, to give our clients a unique experience in the channel of their choice. And this, in fact, is to be a bank for each client. And I do believe in that. And we've been working hard to meet our goals in that direction.

Yes, it's important that we have a lighter structure without having to look at all of those necessary costs when you have a treasury within the branch. We are talking about revolving doors, reinforced glasses, alarm systems. It's -- I'm not only talking about a traditional branch in the market. Therefore, our challenge is to remain present in every single location with a very light structure. And with that, we will be closer to our clients. And now with further specialization. This is very important, and the results show that we are on the right track. Thank you. Thank you, Motta. Thank you.

Thank you, Daniel.

So you have the floor again.

So thank you, Fausto. Our next question is also quite interesting. And that's something very dear to the bank, and I'm talking about the people. The question comes from Mauricio Oliveira, Mauricio Gonzales, Elisberto Branch, among others. The question is, what are the main strategies of Banco do Brasil to retain and attract talents?

Perfect. To help me with that, I would like to call Mr. Enio Mathias to help me with that answer.

Welcome. It's very good to be here with you. So let's talk about how to retain talents. How are we dealing with it? That's a very important topic. Talent retention is very relevant with Banco do Brasil. The entire organization talks a lot about that topic. And this is an ongoing topic because we talk about that whenever we talk about strategy. Currently, we have 85,000 employees, and they are very committed to the organization and to our clients. Our employees are the best asset of the bank. And the selection of employees happens through that public tender. Most recently, we conducted the largest tender in the country with over 1,600 candidates competing for 480 job vacancies. And more recently, we launched a program called Evolution. Evolution offering over 1,200 courses with a high engagement on the part of our employees. We also offered training courses. We relaunched the scholarship program, which contemplates undergraduate, graduate and also training in a foreign language. We also offer programs for executives with the purpose of selecting the best executives for the bank. And we have partnerships with international organizations to identify and train professionals in a succession program. The culture of Banco do Brasil is very strong, and we are very proud of this identity.

Excellent, Enio. I would just like to reinstate a very important point because it was something that was expanded to the entire bank and which is our famous PDG program. That PDG program aims at compensating through a bonus those that perform the best. So meritocracy is a key word in our organization. And now this has been materialized through our PDG program. So Daniel, what else? Very interesting questions.

Our next -- the next point is linked to the common conversation I have in the market is how the bank is generating new revenues? And this has to do with capital markets and more particularly our partnership with UBS. This question comes from Camila Prado, Luis Roberto, Marcus Haze, among many others. And they ask us to comment on the outlook of this partnership with UBS.

Well, I will call our wholesale VP, Pecego. He is with us from Sao Paulo, and he will help us with that answer. So Pecego, I would like to initiate this conversation saying that here, we have the merger of 2 important forces. Banco do Brasil, with this entire capillarity with many branches which is very important for domestic issuance; and you have a partner with an enormous capacity for colocation abroad. How do you see this partnership? I think last week, we celebrated 1 year of this partnership. Has it been productive?

Well, certainly, Fausto, this is a very strategic partnership. But before I start, this is a virtual touch, as everybody touched you, we can do that virtually as well. This is a very strategic partnership for Banco do Brasil because it combines UBS' expertise in global distribution with the strength of distribution from Banco do Brasil in our domestic territory, especially in regards to our retail and private areas. Strategically speaking, Banco do Brasil wants to be a service platform that serves companies earning over BRL 40 million a year. To that end, below this wholesale vice presidency, we combine corporate, private banking, also the corporate and external network of the bank, private banking as well. And this private banking job is crucial to the bank. We are now expanding and growing our service process to serve also large farmers and we have our own proprietary portfolio. And rest assured, and there is no question that this partnership between UBS and BB will rank among the first ones in terms of IB in our local territory. It's also important to say, Fausto, that this month, in October, we celebrate the year 1 of this partnership with UBS with excellent results. In the first half of this year alone, as I mentioned before, we structured 116 transactions. And right now, we are working in 78 new transactions. Even in our pipeline, we have more than 130 operations. That means to say that I am certain that this is a very successful partnership. And we still have a lot more coming. Well, when you combine 2 giants with a firm purpose, we'll get there.

Thank you very much. Now Daniel, you have the floor again.

Thank you, Fausto. Well, this is a topic that is very much present in the market, and that has to do with credit risk. We consolidated some questions. We've got questions from Andre Luis, Alexandre Hills, Fabian Onerio, among others. And they ask us to elaborate a bit about the credit outlook, especially in terms of delinquency or default.

Perfect. And to talk about this topic, I will call Ana Paula Teixeira, our VP for credit and risk. This is a very important topic. Welcome.

Thank you, Fausto. Hi, Daniel. Well, to talk about this topic. I have to start by talking about its origin. We see credit as a very, very important leverage to reach our results. So from then on, ensuring the quality of this portfolio, it's a very necessary condition for us to have good results. And by the same time, it's important to monitor the quality of the portfolio through our models. And because of the strong models we have, we are posting very good results. I just said that by June, we had 1.86% of delinquency, which is an all-time low record and below the average in the market, which was 2.30%, and all of that stems from investments in models in our technical team set so that using data we can improve and enhance our credit management area. Because of that, we were able to deploy prevention measures through this very delicate period of the pandemic. And also, we try to look and understand our client. Through this model we could anticipate, we could have a potential anticipate of BRL 1.8 billion. And with that, our coverage ratio was 325% in June. That puts us in a very comfortable position because we know that our portfolio is a very good quality. Because of that, we even reviewed our guidance in terms of expenses with our delinquency numbers.

Paula, I should also mention that the VP of Risk and Control is an area that makes us very proud also because I was there at one point. And I would just like to remind you that this is due to heavy investments. We invested heavily on people, training people to help them understand their relationship with clients. We also invested in tools, technology. And today, the strength of our models just speak for themselves with very low levels of delinquency. Thank you. So Daniel, back to you again.

Perfect. I think this will be our last question because we have some time constraints. But it's also a very interesting question. The question is about the bank's results and the outlook. It consolidates questions from Mr. Pedro Del Mundo, Felipe Luis, Danilo Gohar, Augusto Parisa Suarez, among so many others. The question is, what are the drivers that will lead you to your results in 2022? What are the bank's strategies to improve return on equity in this current scenario?

Excellent question. Let me call here are Mr. Ricardo Forni, our VP for Finance.

So let me talk about 2022. But before we get there, let me just give you some of our grounds for these topics. I think it's very relevant that whenever we talk about results, that we should also talk about 2 strategic pillars that somehow will guide us towards better results. The first is client centricity, and the second pillar is the intensive use of technology. I think these 2 factors are very important for us to leverage our businesses and also to get better results. Yes. In fact, we saw throughout the day mentioned by many of our people that one of the most important things -- Ana Paula just talked about credit. That's a very important leverage in our results. It has always been like this, and it will continue to be so.

In addition to loan portfolios like agribusiness, payroll deductible loan and loans to small and midsized companies, we also want to provide better return -- risk-adjusted better returns, especially in retail, improving the mix of the portfolio. I think this is a very important part, and we've been moving forward in this strategy. So we are already protagonists in agribusiness. Our portfolio reached BRL 260 billion in the first half of the year. And by the same token, we are also very relevant in terms of payroll deductible loans with more than BRL 100 million in our portfolio. But in order to leverage in other lines with better risk-adjusted returns, we also have to expedite some other alternatives. And by doing so, we will have a better portfolio mix.

Well we see a positive trend towards NII. According to market access in 2022, interest rates should be stagnated at the level for the end of 2021. So they should remain stable in 2022. So this scenario, combined with the growth of the portfolio, they will benefit our margins. Our models also point to the fact that credit provisions will resume to levels prior to the pandemic. Therefore, now, we are in a stabilization process, we are cleaning up our portfolio from the pandemic period. And fee income should have moderate growth with the evolution of revenues from new businesses, which will balance fees from current accounts. So we see pix having an impact on our revenues from debt payments or transactions. Another important aspect that was mentioned by our retail VP is our focus on management relationship, which brings more assertiveness in the offering of products and services. Moreover, we are also evolving consistently in our investment advices and loyalty of customers, expanding our benefits like cash back end points. We also bring about new revenue streams through new business models. Digital transformation, which has been mentioned by several of my colleagues, will grow and will make us constantly present with our clients no matter the channel they use. And we also introduced different platforms like Broto and gift cards. And to conclude, it's also important to mention the bank's discipline with administrative expenses. This is very important. We also know that the lines of administrative expenses in 2022 will be more pressured due to inflation, but there will be a counterbalance through our efficiency measures to reinforce our commitment with cost control.

Okay. Considering all of these aspects, I do believe that we will continue to grow the bank in a sustainable way, adding value to our shareholders and also the entire society, which is our main objective. Thank you very much. Daniel, so you have the floor again.

Well, thank you. As I was saying, we had more than 400 interactions throughout this event. And we were able to answer most of the questions, but unfortunately, there are still some that were not answered. But for those, our IR team will get you the answers you want. We also got some questions about products. And then we are forwarding these questions to the related areas. I would like to thank you all very much for joining us today. Thank you for your interactions, and thank you for your questions. So now I turn the floor back to you, Fausto.

Thank you, Daniel. Thank you all that have joined us today. But today, we are honored to have here with us in this event, the President of APIMEC. This is a partnership that we have with them for over 27 years. So good morning, Lucy.

Good morning.

Welcome. Welcome to this wonderful event that we carefully prepared, especially to our investors.

Well, thank you very much. Thank you for this partnership. You already emphasized that this has been a very long-lasting partnership, 27 years. For us, you fit into the emerald category. And also, I would like to say that you are part of our history. APIMEC just celebrated its 50th anniversary last year. So this is one of the oldest organizations, and this proves that we've been present in all the relevant events. And the APIMEC meetings is probably one of the most relevant events that we have, and you being with us for 27 years, you are probably a member for the longest time. So I would like to thank you very much for this partnership. I would like to thank all of the participants. I would like to thank you, the CEO of the bank. Thank you.

Thank you, Lucy. Well, we are approaching the end of this event. This is our seal. So since year 1, the bank is always fulfilling its role to have this event in place and to give the most updated information to our investors. So we are approaching the end of our event. And here with us, we have a team that is leading this entire transformation. I would like to reinstate our commitment to generate value to all of our relationship audience. Our constant search to deliver One Banco do Brasil for each client. I would like to thank our investors for their trust on us and the time that you spent with us. I hope you enjoyed this BB Day, which is probably the largest in our history. At one point, we have 6,729 computers connected to this BB Day. Thank you very much for giving us the opportunity to tell you how Banco do Brasil is paving the way to the success of the bank in the future. Thank you very much, and I hope to see you soon. [Statements in English on this transcript were spoken by an interpreter present on the live call.]