Banco do Estado do Rio Grande do Sul S.A. (BRSR6) Q4 FY2025 Earnings Call Transcript & Summary

Good afternoon, ladies and gentlemen. Welcome to Banrisul's Video Conference to discuss the results for the fourth quarter of 2025 and the whole year of 2025. This video conference is being recorded, and the replay will be available on our Investor Relations website a few hours after the event. In addition, this broadcast has simultaneous translation into English. If you prefer this option, simply click on the button on the bottom of your screen. Today's event will be divided into 3 parts. First, our CEO, Mr. Fernando Lemos will discuss the main highlights of this quarter. Next, CFO, our Director, Gonzaga, will present in greater detail the main figures and performance for the quarter and the year. Last but not least, we will wrap up with our traditional Q&A session with our market analysts. Today's presentation -- to hand this over, let me tell you that today's presentation will be available for download in the chat on this platform and also in our Investor Relations website. CEO, please? Mr. CEO, can you hear me?

Thank you, Nathan. It's a pleasure to be here to discuss our results. We are effectively reaching 2 years and so of our management. We started by the end of 2023, and then we established the guidelines and the goals for our work. And now we have been consolidating everything that we have devised last year to change the portfolios, change a bit the rural portfolio loans, adapt our company's accounts portfolio and we have seen the results, the consolidation of this work the bank has been implemented. Our net income reached BRL 1.6 billion, ROE of 14.9%. Our loan portfolio grew 4.8% year-on-year, especially in company's account. Our total funding reached BRL 112.4 billion, 15.4% year-on-year growth and our net interest income increased 8.6%, and our cost of credit, cost of risk is 1.6%. And our costs are well managed. Basically, almost only the effect of the collective bargaining agreement and other expenses or administrative expenses are below the inflation rate. We have consolidated these numbers this year. And as you know, we had the problem regarding the seventh and eighth hour here in the bank, and we managed to reach a collective bargaining agreement and over 3,000 employees started working for 6 hours. This will bring benefits ahead. We are pretty pleased with the development of our bank, which was expressive, a robust growth based on this work to streamline the bank's portfolio regarding the growth of those more profitable accounts and portfolio, and leaving the special credits within the adequate pool considering our bank. We increased rural loan adequately in proportion and also real estate credit. We've had some funding problems because the savings accounts are not very attractive at the moment, but the Central Bank has implemented some changes. We are waiting to see how it's going to be developed. But we are pretty -- all in all, we are pretty happy with the development of our bank. And we'll check about the changes of the tax reform or tax reform laws will bring. We're still waiting to see what's going to be like for the companies and this tax regulation changes will bring. But effectively, I can say that we've had a 2025 that is pretty pleasing. We are very happy about it. Our ROAE is consolidating above 2 digits. It was always -- it used to be below 1 digit, but now it's 2. And the bank has a more structured position right now. Initially, I would like to tell this to our friends and co-workers and our directors, our officers are here to complement on these numbers and results. Thank you, Nathan.

Thank you, Mr. CEO. Now, we'll go into greater detail on the quarter and year numbers. So, I hand over to Mr. Gonzaga.

Hello. Good afternoon, everyone. Now, I'm going to go into greater detail regarding the bank's results for 2025 year-on-year and also quarter-on-quarter results. As you can see, we have delivered the last quarter of '25 of BRL 656.9 million growth year-on-year for the fourth quarter, up 131% if you compare the fourth quarter of this year and the growth of 98% if you consider -- if you compare the third quarter to the fourth quarter. The net income in 2024 was BRL 916 million. And in 2025, it was BRL 1.6 billion. In terms of ROAE in the past year and also comparing the last quarter of '24 to '25, there was an increase of 23.8% ROAE, up 11.6 percentage points in the past quarter of '25. Annualized percentage was 5.8%, 9.1% in the final quarter of '24 versus 14.9% for the fourth final quarter of '25, placing an ROAE of 5.8% upwards in terms of ROE profitability, which is really expressive, as mentioned before. In terms of net interest income, we managed to reach in '24, '25 of 4.5% growth if you compare '24 to '25 and a growth of 0.8% quarter-on-quarter. And if you compare '24 to '25, we reached an increase of 8.6%. In the year of 2024, it reached BRL 5.9 billion. In 2025, BRL 6.4 billion. The loan portfolio was BRL 62.1 billion in 2024. BRL 60.5 million (sic) [ BRL 65.1 million ] in December '25, 4.8% increase if you compare December '24 to December '25 and 1.5% if you compare September '25 to December '25. Our guidance was 4.8%, a little below what we managed or wanted to reach, but it was a pretty well consolidated portfolio and credit lines, with higher profitability had a good performance in this portfolio. Both for companies and individual accounts, we had a very good annualized performance. In the past quarter, the accounts profitability decreased a little. This was expected. In the company's accounts, we had highlights of the Conta �nica in our debit accounts, cards and also the working capital. And the final balance, if you compare the final balance with the average balance when it comes to the second or the third day, we have the payroll. We have a series of amounts that are paid, so there is a decrease. But as the month goes on, that is a very good result for these portfolios -- for these accounts. And so they deliver a pretty expressive and robust performance, which helps or really helped build the performance of the bank, the retail accounts for both companies and individuals accounts. In terms of exchange in foreign exchange in Rio Grande do Sul in terms of exports, we had a good performance of 34.9%. It adds a spread, margin and service to this portfolio. And so foreign exchange has been contained. In companies, they have a natural swap. They come with a natural hedge for their operation. In terms of asset quality, in the 90 days number, we had a slight increase in terms of delinquency and default, but this is natural because we have due to Ordinance 4966, that is the result of this. In next month, we have a natural flow of the credit that entered in January 2025, and it will start to be written off naturally. So from April on -- April 2026 on, we will have better results. But even in January, we could see for this portfolio with a little under 180 days, we had some written-off credits. And we will have a percentage equalization in a less attenuated line of growth, which is natural. We have a very expressive retail portfolio, and it has some delinquency rate, but it's part of the game. And we have 3.6% of these loans of Stage 3 credit is up to date. They are up to date, and they are -- they have been paid, but they have to do with a cash flow regimen. And in terms of cost of risk, there is a slight increase, 1.4%. We will go up to 1.6%. We need to be careful with the increase of cost of risk, but it's part of the routine game, part of the work. And it's also a result of Ordinance 4966, which changed the framework in terms of default rate after 90 days. And this will be corrected in time for the whole market in financial institutions. In terms of administrative expenses, there was 6.2% increase, 1.1% increase in terms of other administrative expenses and personnel expenses reached 8.5%. There were some adjustments regarding our frame of work to 6 hours. This is embedded in this percentage of growth. This will be corrected as the year goes on of 2026. In other administrative expenses, they account for 1.2% only below IPCA. It's almost a residual growth. We have worked in terms of renting and all types of expenses. We have been negotiating them and working them, trying to streamline those expenses in terms of branches to control -- to keep this administrative expenses under control. In terms of service and income, we have a very strong competition, Central Bank -- sorry, just a second. Thank you, Nathan. In terms of other operating expenses, well, we had some events that took place later. We can give you further explanation on that if you want to. But we had an expense related to labor suits. We had to adjust some things, but the residual of all the stock, it was the residual. So from now on, labor lawsuits will have to do with monetary annualization and actualization based on the Selic interest rate. We also had other operating expenses, some due to a labor lawsuit, it was negative for us. It has been judged and passed into judgment. But in due time, we will revert this operating expenses. But anyway, it's recorded there. And we had a lawsuit, which started in 2003, 2004 related to an expense that we acknowledged as a fiscal rebate expense, but the fiscal authorities said no. And then we went on and discussed that in the suit, and we had to wait on the judiciary to decide on that. And it had to do with the remodeling of the financial institutions that also restructured the bank. And then we had the pension funds for Banrisul, and it was a natural -- we thought it was a natural expense of the bank. The judiciary said no. But in fact, it was. So, there was what we call the reversal of these operating provisions, and this is the value that we adjusted by the end of this understanding because this is the final judicial sentence in terms of the legal part of it, in terms of legal discussions. So it's not up for discussion anymore, and it's more about the bureaucratic part of this lawsuit. It hasn't been passed into judgment yet. It's not a final lawsuit yet. And so if you put it all together, we have this effect on our balance sheet in terms of recurring expenses. And we had to go back to the origin, delivering this in the recurring form to the balance sheet. So, performing all of these adjustments, we reached this positive number of BRL 844.3 million in the last line over there in the total line. Well, it's part of the game and these things happen. We also had concomitant actions to offset this in terms of reversing these judicial decisions. It was a final decision, and it was a government lawsuit. And now we are appealing this decision, and we trust we will be able to reverse this first decision. But we had to mark this in the provision. We also had some labor adjustments, as I said before, as I mentioned before, but we had a positive balance, which helped to increase our result even more, which was an exceptional result. In terms of service fees, it wasn't what we expected, but the Central Bank managed to make some cuts and benefits to clients. In the past, we were not charging for some of these fees yet, but we'll start charging for these fees and adjust ourselves to the market. We cannot charge anything that we want. We need to be careful related to the credit card. The market says something. We cannot play against the market. Otherwise, we will lose our base of clients. So, this is a revenue that has been loaded or carried with the slighter reduced speed. Digital banks removed a lot of margin, especially in terms of credit cards, annual fees and all of this package that come, they decreased the growth. And we have worked really hard to increase our client base and we need offers to provide the customers with, to prove to our clients that our services are good. And once the clients get used to our service, then we can start charging some fees if possible or when we have the opportunity to do that. But we have a positive number for service fees. In terms of -- and it's an annual growth, usually corrected based on the IPCA. In terms of funding, with 87% of costs, funding, really good, excellent performance, 15.4% in the portfolio. We ended with BRL 112.4 million, 4.9% growth. And if we add everything, we have BRL 132 billion in terms of funding. We equalized this portfolio to balance to offset with the bank. And in the pre-fixed area, we are really well placed in terms of our assets, pre-fixed assets and post-fixed funding in terms of liabilities. We almost have a perfect balance, doing away with any volatility in terms of Selic interest rate, for example. And the cost of funding is a very positive one, and the balance in terms of pre-fixed products is also really robust. Next, our capital. It's excellent results. 19.5% of growth in terms of the Basel ratio, a comfortable Basel ratio. As we said before, there was a funding of BRL 1.850 billion in LF financial letters of credit, issued in 2025 for the LFSN. It's based on Selic interest rates, so it's growing. It has to do with our needs for capital based on the Basel ratio. And there was a redemption bond Tier II of $300 million paid in January in 2026. We recovered this in the fifth year. So, this Basel ratio presented in this picture of the balance will decrease a little bit, maybe reaching the levels of November of 2025 due to this written off of this redemption, which was programmed already. We anticipated this funding to be protected in terms of capital. And we have another LFSN, which will be redeemed in 2026 and 2027. So, we have available credit. We have a good Basel ratio. We are prepared and poised to grow. In terms of our guidance, we wanted to reach 8.8%. We reached 4.8%. There are some explanations for this guidance. We stagnated the growth in real estate portfolio and also reduced the growth in the rural portfolio. And there was a mix of credits with higher profitability in the accounts. And there was a migration, which reduced the payroll loan. There was a decrease in this payroll loan portfolio, and the higher profitability portfolio had an excellent performance throughout the year, which I discussed before. So, there was a migration from one portfolio to another portfolio, giving priority to those which are more profitable. In terms of net interest income, we wanted to go from -- we -- our range was 7% to 12%. We reached 8.6%. Our cost of risk was 1.6%, and our administrative expenses was good. We were below our guidance, 6.7%. So the lowest the better -- the lower the better, right? So it was good. So the net interest income for 2026, we aim to reach 8% to 13% and cost of risk, 1.2% to 2.2% and admin expenses, 5% to 9%, with a total loan portfolio guidance for 2026 ranging from 3% to 8%. So, this is our results, our performance. We are very pleased with this to deliver these results to our clients, to our investors, those who believe in the role of Banrisul to our shareholders. This is what we wanted to deliver, and we did our homework and we worked really hard to deliver these results. Thank you very much.

Thank you, Director Gonzaga, for your presentation and for detailing the figures. [Operator Instructions]. Now ladies and gentlemen, let's start our Q&A session. We'll start with Antonio Ruette from Bank of America. Hello, Antonio. Can you hear us?

Yes, I can hear you properly. I have 2 questions to understand your guidance a little bit more. So when we think about provision and cost of risk, your guidance is pre-open. So it encompasses many events. And given the new profile of our portfolio, when you look at the expansion of the portfolio, as Mr. Gonzaga said, it was based on more risky lines in 2025. So given this mix, could we talk about a cost of risk of provision on portfolio near the top of this guidance? And my second question is, should this be the portfolio profile in 2026? I mean, this guidance from 3% to 8%, is it focused on which lines, maybe mortgage, payroll and rural growing in a slower pace and the commercial lines growing faster? These are my questions.

Yes, I would say, yes, I agree with you, our expectation in terms of rural credit. Our appetite is for a good client. And depending on their cost, regular cost, we will renew this. We do not have a lot of appetite for those rural investment credit lines. So the idea is to renew the stock of that portfolio. In terms of real estate loans, we've been financing some enterprises and we have a commitment with the builders that the apartments -- we will finance the apartments produced by these constructors. So, that is a recurrent margin and will be replaced by the new credits, new loans from these builders. And then the portfolio will not have an increasing balance will be stagnated. There will be a renewal and the loans that were given will maintain the balance of that portfolio. And we are not going to grow in other lines, as you mentioned. So the group of specialized services will not increase in loans. But these are portfolios that deliver lower profitabilities in the market. In the commercial accounts in foreign exchange, we are going to go into this portfolio and make this portfolio grow. This give us margin. It's simply 0% in default. The default rate is simply 0%. And those portfolios that deliver results like overdraft in Banrisul, overdraft has a different bias. We are the second largest balance in overdraft. Half of our overdraft in Rio Grande do Sul is in Banrisul, but it has a different bias. We have Banricompras service with the electronic overdraft service, let's say. It's a plan of payment that competes with Visa and Master. In the client's debit account, it has a balance like a credit card limit, and they use this. We have an expressive amount that they can use, BRL 15 billion a year. And recurrently, they use their balance mismatching from the payroll. They always have a debit balance until they get the payroll. They get this 30-day. So they -- if you go to a restaurant and then pay with Banricompras, you have 30 days. It's 12. If it's today, it's March 12, not even 12, it's March 14 because it's 30 days. If you go to the petrol station, to the oil station, you have 60 days to pay. It's all over the city of Porto Alegre and the state. In any gas station, most of them will give 60 days to pay. There is a default rate, but it's a low rate. And according to my experience and our models, we have been following this. I'm not worried about this portfolio. If the margin is 5%, excluding growth margin and income tax, you have BRL 100 million in that portfolio and 5% delinquency rate. But it's BRL 15 million. If you have BRL 15 million in the portfolio, you have BRL 30 million in the default. But there is -- this delinquency rate is expected in the retail, but they do deliver a margin. Even the overdraft portfolio has the same behavior. Credit cards have the same behavior, but the margins are not -- are expected. We have the delinquency rate. If I had BRL 100 million in 5% and then if I reach BRL 200 million, that will be the same rate of 5%, but I'll get more because I sold more. So, we have this company's portfolio, this Conta �nica. And the Conta �nica delinquency rate is residual, very, very low for the company's portfolio. We work with a very good working capital. They only pay that fixed interest in this and other lines of loan for company's accounts. We have an expected delinquency rate. In terms of payroll loan, it's not expected to grow, only to renew this with better advantage and for those loans that will be paid up this year that started in '21 or '22. And then we have a rate that will be higher with a shorter period because we used to work with 144 months, 120 months. But no, we -- now we cannot work with more than 84 months. And the loan of INSS, we only have a small number for -- a small number of clients who can get INSS loan with 96-month period. And then for the payroll loan, we have a portfolio of 76 -- 75 months depending on the client's age bracket. Well, we can expect a delinquency rate, but it's not to be -- we are not afraid of that. We want to give a very good result for the bank, considering all of these aspects.

Thank you very much, Antonio. Any follow-up, Antonio? Well, let's move on. Mr. Mateus Raffaelli from Ita� BBA.

I have a question regarding PDD and delinquency rate. If we exclude the provision for doubtful accounts of judicial deposits, this provision for doubtful accounts would have gone up considerably. I would like to understand more. What is pulling this delinquency rate upwards? What about the 4966 Ordinance or the deterioration of the portfolio? What is the issue here? And could you talk about the dynamics for the 2026 in terms of delinquency rate or default rate, please?

Mateus, thank you for your questions. Regarding PDD or the provision for doubtful accounts and delinquency rate, we left at [ 21.92 ], we -- 180 or 200, then we would write them off. With the 4966 Ordinance, we adopted a policy to write them off around 720 days stops. So, they will be longer in the portfolio -- in the active portfolio. Consequently, in this first period, there will be a higher elevation of the provisioned amounts. Consequently, in the delinquency rate indicator, we had 4.2% by the end of it in 2025. For 2026, our idea is to have this something around that, around this rate, 4.2%. We do not have any worries about expressive amounts because as Mr. Gonzaga said, we decided to operate with small and medium-sized companies in the retail. So, thousands of thousands of operations every day, low-cost operations with good margins. And then we have a portfolio growth of 4.8% and company's accounts grew 20%. We reached BRL 16 billion in the company's accounts portfolio, the double. We doubled this considering the amount 2 years ago, especially receivables and collateral credit cards. Our collection portfolio in this period, they give us for the payment of installments and to guarantee credit operations, they grew expressively in the past year. And we have modernized all of our system of collection -- banking collection systems. And so we are delivering a super modern product to our clients. Now regarding credit card receivables, they help for the result, Vero has given us a very good support, very reliable support, 120,000 clients accredited by Vero, transacting every day with credit cards, operations, plus Banricompras services. So all in all, I'll tell you that there's nothing that worries us in terms of significant amounts because the portfolio has grown based on a large client base based on receivables, especially. And for 2026, we want to follow the same pathway. We imagine, as you saw in the guidance, grow around the market projects for credit growth. It talks about 8%, 8.9%. That's the pathway the bank wants to follow, giving priority to short-term operations and also operations based on receivables for companies' accounts. And for individual accounts, we will focus on personal accounts. And also, as I said, the payroll loan will not be increased. We will not make it grow because we have a portfolio of 150 months with an interest rate, which was lower that we are using today. So the refinancing of these operations is not viable, especially in the state in which the margin was reduced. The state changed the criteria to provide margins. It went from 40% to 35%, and it changed the gross margin of growth salary. Today, the state authorizes the margin based on the net amount. So, considering all the obligatory figures and amounts and based on these discounts, they will authorize the margin. This give us more security. It's safer for the market. The client has less debt to pay for. So, we maintain the purpose of these 2 previous years for 2026.

We remodeled the collection service.

Yes. Mateus, let me just add Dr. -- Mr. Gonzaga also reminded us of this, we are restructuring the collection services. McKinsey has helped us. We have hired their services to have a predictive control over the whole portfolio and anticipate possible issues in the credit portfolio management. We have implemented Asia, and we work with a collection hub that we call finances -- up-to-date finances. We can connect all of our branches, all of our digital channels to collect the services, including companies and firms specialized in collection services. We have implemented Serasa. The bank didn't use this marketplace and Serasa and other services. And Serasa is the second-best collection service to recover services, recover payments.

Thank you, Mateus, for your question. And thank you, Dr. Ivanor for addressing it. Now let's move on to Mr. Carlos Gomez from HSBC.

My question, in fact, is a continuation of Antonio's question. Well, you've been talking about what is not going to grow. Payroll is not going to grow, rural portfolio, real estate portfolio is not going to grow. Could you talk in more detail why you're not growing the rural portfolio? Is the same problem faced by Banco do Brasil? What about this interest rate? That's my first question. And my second question has to do with legal suits, longer suits. Do you have this in the future? Should we consider this labor -- legal labor -- sorry, legal lawsuits that can affect the bank in the future? So why shouldn't we grow in rural and real estate loans? And what about liabilities that can have an impact moving forward?

Well, in terms of real estate and rural loans, well, real estate loans in Brazil, it's about funding. And the natural funding for this in Brazil is the savings account. In Brazil, the new generation that generates wealth, they do not have this habit of putting money in the savings accounts. So only older people have savings accounts or mostly. So this product is not providing a very good result. So Central Bank from 2026 on and in 2027 will implement a new law, a new regulation for the concession of real estate loans. So we're still waiting. The market hasn't found its position yet. We are implementing some services and we are working with some builders to finance apartments for the final users, final clients and also used apartments and used houses, we can provide loans for these. Well, the portfolio growth has to do with what is paid for monthly based on the installments. So we do not expect it to grow, but we expect it to continue. In terms of rural loans, we in the bank management, we decided that the bank will have a size of rural loan. We are a regional bank. We operate mostly in Rio Grande do Sul. So we have to provide rural loan. The bank cannot be exposed or cannot expose half of its assets in rural loans. That's why we decided to have this. We have an equity as a reference for this loan. As we increase our net income, and we will grow this rural loan and we will manage these loans. We have some priorities for some products. We have the working -- the payment of rural loans for the -- for paying for the crops and for some products like irrigation, soil correction, we have some loans for these services. They are paid every 6 months or every year. But for longer loans, our appetite has been decreased. So these loans are not expected to grow, but they will be expected to continue. We want to grow -- we want to increase our share in the company's accounts because the corporate accounts is a very good option. We do not work with Petrobras. We do not work with other big companies. But we have companies that have their payroll with us. We have FINEP operations. These clients that have their payrolls with us, these companies that have their payroll with us, we will continue. We'll make them grow. But yes, they have -- but the rural loans are not going to grow, but they have a certain weight in the mix of the product services. And -- but for the company's accounts, we want to make them grow. And for the companies -- sorry, for the individual accounts, we also want to grow. We won more clients in the digital accounts and we also want to make our retail services grow based on these individual accounts, lower values, but a very higher margin. This is our priority.

What about future liabilities?

No, no. In terms of future liabilities, well, our PDD, our provision for doubtful accounts and labor portfolio and labor liabilities, we are very well protected in this position. We changed the personnel management. Now our employees, they work for 6 hours. This has protected us from these liabilities. We have some liabilities still, but we have been provided for them. They have been -- they were accrued for. And then we will reverse these provisions as time goes by. We have some money in our cash, in our credit operations, in our loans operations. We have a positive margin, and then we'll go little by little, no hush. And then we will negotiate for those -- with those that will get the money or we need to pay.

Thank you, Carlos. Now let's listen to Olavo Arthuzo from UBS.

I will try to approach a topic we have been discussing not only in this quarter, but also in the previous quarters, which was a positive surprise on our side and also on the side of the investors regarding the profit and also the profit of the bank. In terms of reported profit, it was around 15%. So the question here on our side that we are trying to understand not only how it's going to be in 2026, but moving forward. So basically, what is the level of return for ROAE for the next few years? So this level of 15% in the ROAE, is it sustainable? And if it's not sustainable, should we expect that level of 10%, 11% for the ROAE? So in a nutshell, I would like to understand your mindset regarding this ROAE that you reported in 2025. What do you think about this percentage moving forward, considering everything that you provided us with in terms of OpEx and provision for doubtful accounts? I would like to understand this outlook for the ROAE, which was pretty strong in 2025.

Well, we have a very positive frame of mind regarding the ROAE moving forward. This 14.9%, almost 15% that you observed, I don't know if we're going to reach a 15% ROAE in the next few years, but the idea is to set the bank in a pathway. Just let me repeat that because the audio was not so good. So 14.9% was delivered this year. It was a very good surprise, a very good performance. We have been remodeling the bank. It's a matter of time. It won't change overnight, this portfolio mix, but we've been consolidating credit models, advancing in a higher share and participation in the market. We understand there is a room to advance. Our participation is small in the share in Rio Grande do Sul. We have a network of branches throughout the state. We work on-site in Rio Grande do Sul, 98% of the Rio Grande do Sul state GDP and also we cover 98% of the population. And we have worked on our sales selling digital channels. We have been remodeling and restructuring the bank very -- I mean, truly deep changes to prepare the bank to face this new changes. Also, we hired McKinsey to help us with the collection service and to increase our share, collect safely, rely on models to do that in the retail area because profitability goes to do with the control of the default rate. It's a fundamental pillar of our evolution and growth. In terms of our collection, we work on 4 pillars. The model of collection for the rural collection is one thing, for the real estate is another thing. And for the companies, the way we try to collect is another -- we have another guidelines. So we advance our share. If we increase our accounts, if we have a proper mix of products with higher profitability, with the directioning of credits that is well designed, what we want from the commercial credit, then yes, we dream of reaching a very good return, maybe not 15% or 14%. I cannot give you an exact percentage. I can -- of course, yes, I understand, but otherwise, I could be mistaken.

Thank you, Olavo, for your questions. Now moving on, and before we wrap up our session, let me open the mic to Fernanda Say�o from JPMorgan.

Well, regarding the rural portfolio, which is still a representative segment, 20% of the total portfolio. Well, we talked about limiting this portfolio. I would like to understand your motivation to be a little bit more cautious in this segment and whether this represents a structural change for the rural portfolio? And second question, could you talk about the expectation of the fees growth for 2026? Yes, the growth of fees, yes.

Thank you, Fernanda. Well, in terms of rural -- appetite for the rural portfolio and second fees. Well, in terms of the rural, we want to -- we need to understand the size of Banrisul. Well, we are a retail bank. Well, the bank -- well, we cannot make the rural portfolio grow so much more and bend the bank's balance or hinder the balance. We need to be -- we need to manage the bank with this view. We are a retail bank. We need to have a well-distributed [indiscernible] the rural loans, but we want to have a limit, a threshold to maintain the equity of the bank. It's hard to achieve profitability if you make a portfolio grow and grow. Even if it's 100% paid up, if it has a 0% default rate, if the margin is not so good, if the profit is not so good, well, we need to reconsider that. We need to grow, make other lines grow, the companies and the individual accounts, especially small and medium-sized companies. And since I came back to the bank, we've realized that we needed to make the company's accounts grow more because we have an acquiring company, which is Vero, and they help us, they support us in these procedures. In terms of individual accounts, now we are -- we will work more with the private payroll loans because in the public payroll loans, our portfolios are on the limits, I would say, or almost that limit. We have a tradition of working with the public payroll loans for -- so it has almost reached the maturity. So we need to have this bird's eye view to understand our portfolio mix to make sure we keep the profitability of the bank in a proper fashion and to maintain the bank's financial equity. Otherwise, we will unbalance this. We all love the rural loans, but we have a limit. And also the real estate loan is very, very important for the economy of the country. It generates jobs. It's a good portfolio. However, in order for you to buy an apartment, a house, we need to have a safe or a good interest rate. The interest rate in Brazil is very high. So there's not a lot of funding. So we would like to make this portfolio grow, but we need to be careful about the bank's profitability. What we've been doing here is about trying to find the right balance to make the portfolios and the fundings of the institution and the profitabilities all work out for the bank. So this year, the ROAE was -- had a very good robust performance as we have seen. And we want to continue this. And in order to keep up with this ROAE and this profitability, we want to follow this pathway, this safe pathway to make the institution grow.

Fernanda, do you have a follow-up on your side?

No, that's super clear. Could you discuss the fees -- the aspects of the fees and the perspectives on fees, please?

Well, as I mentioned before -- just a second. As I mentioned before -- well, the fees have a limit imposed by the Central Bank. I mean, it has decreased this. They have a limit for the consumer. It's good for the consumers, but it has a certain effect on the banking systems. At Vero -- I mean, even at Vero, the market has changed. We have worked with this offset. It's all embedded in this unique fee. And then we consolidate revenues that could come from fees. They will be consolidated based on the anticipated receivables. So instead of waiting for 30 days or for more days, they will get the money on demand. It will appear in a different fashion. It's a very important point. In terms of company's accounts for small and medium-sized company, individual companies, we will make this grow. We will make the service fees grow as we advance in this market. And another aspect is that we need to increase the client base. If you have more clients, we have more fees. We have been increasing this in the company's accounts. We have been working to make this base grow to grow in terms of lots of clients, bulk clients, we have excellent payroll in the state with working with municipalities. Now with this new change brought by the company benefit and there will be a change in this market, we have lost some of this at Vero, but we are working along with the municipalities to make this grow again. This will help us compose an important revenue in terms of benefits paid by companies. But anyway, the idea here is to make the client base grow in the company size and in individual accounts side. Also, the currency portfolio is a very good way to make this grow. We want to double this base. But this will not be quick growth. This growth will take time. We will maintain our basis and make them grow, maybe based on the IPCA or -- but they will be consolidated. And persistently and little by little, we reach -- we expect to reach good results. I don't know if I answered your question, Fernanda?

Now moving on to the final question. Let me call Eduardo Nishio from Genial.

Fernando, Gonzaga, Nathan and all the other executives, I have a question regarding the guidance and bank's efficiency. I'd like to understand a little bit more about the planning and the remodeling that you made in the footprint. What we see in banks, national banks is a dramatic reduction in branches, in the number of branches. Banrisul has maintained the number of branches, right? So I'd like to know a little bit more about your footprint and also administrative expenses around -- I mean, above inflation rates for some time now. So how have you invested or how have you worked around on this delta above inflation rate? What do you expect to do around that? And what about the efficiency rate, which is around 60%. So what do you expect this number to reach? What number do you expect to reach? Well, in general, I would like to know about these expenses.

Well, regarding the footprint, branches footprint, we have been remodeling some of them. So the clients enter directly into the branches, and they have another door and then they will go directly to the ATMs or cashiers. And we also work with ATMs in these branches. We have been consolidating branches like we take 2 or 3 branches and they -- we turn them into just 1. We have exclusive branches for companies accounts, not a lot of them. But in specific cities like Caxias do Sul, Porto Alegre and Pelotas, we have a branch, a bank branch that is specifically devoted to company's accounts. It's another model of bank branch. Well, we will continue with this on-site branches. We do not want to close down the branches. But we want to turn these regular branches into business branches like 2 or 3 employees to receive the clients and to offer services. And we also have -- we are planning Banriponto, like a point of sales. Bradesco also has this. It's like a banking correspondent service. To meet the demands of businesses and also daily operations to pay for -- to pay bills, light bills and water bills, they can go to this banking correspondent services. And this is a profitable business and will become even more profitable. Every 5 small banking correspondent services account for bank branch. And this -- we work in partnerships with this business. It has a very good long-term economy, savings, and in the medium term, this will provide us with good savings. However, we are not going to dismiss employees. We are not going to have massive layoffs, nothing like that. But our expectations regarding operating efficiency and efficiency in general will get lower. We have a project and we will deliver that as soon as possible in the next semester. We will improve our operating efficiency. We'll do that. Which was the other question?

Well, that's it. It's interesting because you mentioned about the efficiency -- the operating efficiency will get -- go down?

Yes, little by little gradually, we will go down.

Could you talk a little bit more about this expected reduction? Will this be based on revenue or costs?

We will increase our revenue and also contain the expenses. We will work on the 2 ends of this. Both things will need to be dealt with will need to be managed, the income and the cost. As you -- as our old employees, they retire and then we have -- we will welcome new staff. This makes a difference in the human resource department cost, let's say. So human resources will have a change in this. This will have a reflection in the payroll. And with these new models of branches, this new model of service provision, this will have an impact. And it will also increase our work on the increase of income. So we need to work on several pillars to make this work.

In order to complement, we have reviewed several investments in innovation and technology. And there is an expectation in terms of -- we will gain more in scalability and productivity. Yes, yes, that's it. We will have some innovations and which will pay off.

In the first semester of 2026, we will scale up in the digital channels very strongly to distribute credit products. So today, we still have a small size. The idea is to scale in our app, digital platforms. We've been modernizing our ATMs parks and cash services in the branches. We will be able to distribute credit. And we also have the banking correspondent. We will implement credit services in these platforms of these partners, the strategic partners. We will then reduce the back office in the branches, centralizing some of these services. So this will give us some gains in scale, efficiency and cost reductions. And our managers, our employees will be devoted to the business to the service provision to the service they provide to our clients. So this will make us growth in terms of revenue and income. The main motto for this year is to grow in income with new business, more services, more credit, more businesses that really make sense and add value to the bank. 2026 will be a hallmark. We will change -- it will be a paradigm shift. In terms of collection, for example, we had a model in which we depended on the branches footprint to collect. Now with this new system of collection that we've been developing, this will move to digital channels. So small retail, small clients will be charged through these digital channels. So in the branches, the managers will deal with very special products. Rural loans that cannot be easily renegotiated, that need more service. Real estate loans. It's another type of loan that requires a face-to-face relationship with the clients. And maybe big companies also will need to continue being managed by relationship managers of the bank. This year, like Mr. Gonzaga, we have directed 300 new colleagues to the relationship managers platform. It means that we'll have more professionals negotiating and talking to our clients with more businesses, more deals with digitalized platforms, lower cost platforms. So we'll make this business -- we'll requalify our business and reduce our costs and increase our efficiency.

That's a thorough multidisciplinary answer. Thank you, Nishio, for your question. Thank you very much. Ladies and gentlemen, I would like to wrap up our video conference on the results. I'd like to thank you all for your participation. See you next quarter. Have a nice afternoon, nice evening. Thank you.