Banco Santander (Brasil) S.A. (SANB4) Earnings Call Transcript & Summary

Thank you for joining us today during our conference call for the results of 2024, the first quarter. We are here in our headquarters in Sao Paulo, and we'll be dividing this event into 3 parts. First, our CEO, Mario Leao, will talk about the main highlights of the period and the strategies by which we will continue to drive our growth in the coming quarters. Next, our CFO, Gustavo Alejo will provide a detailed analysis of our performance. And finally, there will be a Q&A session. I will now give you some instructions. We have 3 audio options on the screen, all the content in Portuguese, all the content in English or the original audio. [Operator Instructions] Today's presentation is available for download on our IR website. Now I hand over to Mario to start the presentation.

Good morning, everyone. Well, it's 10:00 sharp, and we are live, and this is the second quarter results conference call. And I would like to start by showing you the main highlights. I'll start with the column in the middle with the numbers. I think you've already seen it. And as you know, once again, we had a very clean quarter, as I like to call it, with some one-off events, which are posted in our results. We had -- we grew 10% quarter-on-quarter over BRL 3.3 billion. So once again, we reached a BRL 3 billion level this quarter. And this shows that we are showing consistent growth of our portfolio -- growth and results delivery. And in the next quarter, good operating results. And we increase -- we had increase in profitability. Our profitability year-on-year is 15.5%, and this is an evolution when compared to 14.1% of last quarter where we already showed an ROE above our cost of capital. So in terms of results, growth and profitability, it's a good performance. And this is a testimony that we are really going -- moving forward in the right direction. On the left-hand side, we have a year-on-year view in how our results performed increased by 2 digits. We will give you more details. And during the Q&A, we can give you more information about client NII and market NII. We also had consistent progress in fees, and this shows that we are going into the direction of portfolio diversification. So since 2022, we've been saying that we need to diversify. We needed to diversify our -- the macro numbers of the bank. We have a credit position, which is different -- more balance in terms of different income brackets and more funding and fees. The idea is to grow fees above our margin growth. In terms of funding, we are also growing 2 digits. This is another marathon, it's not a sprint, because this is an effort that spends for many decades. I will give you some additional information further on. Our LLP is decreasing year-on-year even though the portfolio is growing 8%, this is a clear sign that our portfolio is becoming even healthier and that, therefore, dilutes the portfolio from old vintages, portfolios that we had to work on during '23 and '24. And now we are seeing the benefits. On the right-hand side, we have the strategy progress. We are certainly talking about our obsessive search for principality. We use this topic -- this theme principality because that means that we want to be the main bank and we want to be closer to our clients. We have to be present throughout the customer journey. It's a multichannel conversation. So this is the summary of our strategy. In terms of free, we had an important launch. We did that just before the last result, free is a very relevant offering and that puts us back into the game in terms of mass income. We will highlight the consumer finance, which is growing. And with lots of transformations, we will give a double-clicking our business of SMEs. It's growing. We are revisiting our service model. And as I said in the last quarterly presentation, I mentioned that. And finally, I think you've seen it, we -- a few weeks ago at the end of June, we concluded the VR and VF benefits, and we are making a merger with Pluxee, Sodexo. And so we increased the valuation of our business BRL 1,930 million -- the recognition of the results. I mean, we could flow over to the results, but to be cautioned, we prefer to reinforce our P&L. So we do have an extraordinary item in the third quarter, but we will just preserve it in our results just to reinforce the balance sheet because this is a good sign of good management. Moving on to the next slide, we talk about customer centricity because after all this reinstates the essence of our strategy. The first major topic that I would like to highlight is that we start talking about principality rather than loyalty. So you might recall that we start reinforcing the topic of principality. We are no longer talking about loyal customers. Of course, loyal clients is something very important. But what we are measuring now is principality. Principality is defined in 3 major blocks: transactionality, the everyday transactions from our clients, credit card, current account, integrated payments and then we have the credit side. I mean, everyday credit that converges with transactionality or more structured credit related to mortgage loans and other things. And the third pillar is investment. So we are referring to 3 main principality blocks, and that defines whether we are the principal bank or whether we are the second bank or the first one. So we have a lot of things to do yet. Not only we show that conceptually, but also in numbers. We improved our principality goal by 6%. And year-on-year, we are making a 2-digit progress. We will start talking more often about principality. And now this is our commitment, and we will speak about it continuously. We also talk a lot about NPS. We've been showing that quarter-on-quarter, I mean we have to show our NPS numbers, either going up or down. So our NPS continue to grow. NPS as a whole transactional, we grow NPS individuals and companies. We have posted high levels, but that's not enough. We want to increase NPS even more converging towards individuals as well. But these are historical levels and quite positive. They're also reflecting every channel. When we look at the digital channel, remote channel, and obviously, they are constantly integrated with the chat experience. So when we look at the physical stores. This is even more surprising because we [indiscernible] an important evolution in the physical channels, which coincides with the new service model that we also launched a few months ago in our effort to redesign our retail platform. The stores no longer own the clients, but they become a major element of our multichannel offering as an element of convenience. So now the stores serve all clients of the bank in a very open way, all of the models are earmarked to that end. So the story is more dedicated to traffic. So NPS grows substantially. Moreover, profitability per vintage also grows. We've been showing these numbers in the past quarters. The 2021 vintage compared to '22 and '23 had a substantial evolution, which shows that we are going in the right direction. We want to grow more, but we are on the right track already. Here, we talk about 3 with strategic numbers. So we capture the strategy that was literally launched one day before the release. I even showed you the video. We are referring to a strategy that involves a complete redesign of the way we deal with mass income. We talk about a new digital experience, redesign simpler and much more supported by a human and digital experience through the app. We also talk about continuous conversation. And I usually say here that we don't want our clients to repeat the story over and over. So the client had a conversation with us and the conversation has to flow. I don't want our clients to tell the story more than once. And we do that through data capture and our CRM experience. We don't want the clients to tell the story over and over again because we have to be able to know the story even before they tell us. And again, we want to be the most present bank in customers' lives and not only through our own will, but we want them to feel that for themselves and NPS evolution is just showing that what has happened to free in the past 3 months. We are very pleased with the evolution. The first KPIs are quite positive. We are reactivating more account holders part of the strategy that I talked to you before during the release and other presentations. I mean from our total base of over 60 million clients, half of it, almost the entire bank, we have inactive customers. So we have a great opportunity to reactivate clients that were not active a few months or a year ago. We also -- we are also capable of converting single-product clients like auto loans or mortgage loans or savings accounts. So we have the opportunity now to bring these clients -- to bring them a more encompassing offering, and we are doing that with a very selective group. So free not only means that we are changing our cost of risk not only means that we are lowering the bar in that credit, in the ocean credit. We are bringing new clients with quality proportionally even better than before, and we are activating the clients that we want to have as well. Now here, we are zooming in into the Select products. I've been talking about Select for the past year when we launched Select. Selects our high-income segment, it celebrated its 10th anniversary last year. 2 years ago, more and I started talking about Select with you. We had 600,000 clients rounding up. And at the end of last year, we hit the target of 1 million. That was a public commitment that I made with you. And I was saying, okay, now we are counting backward towards our target of 2 million. So 9 months later, I would say -- I'm pleased to say that we already have 1.5 million clients. And we are not only focusing on the number of clients, but we are growing with an NPS that hits the mark of 70. This is the highest in our history. And this is through public survey NPS between the first and second banks in terms of high income in Brazil. And this makes us very pleased. And we do that by growing our credit portfolio, loan portfolio, and we also do that through investments. So principality is increasing among high-income clients. And since we are never totally satisfied. A few weeks later, we launched a new positioning that we call the -- our positioning -- repositioning of the brand, and this is also migrating to high income clients with [ commerciable ] sales, starting with you. So we want to be very close and being close meaning human. Of course, the digital also has a very good relationship with our client. But we want our clients to be supported by people available 24/7. These are experts in investments in our AAA and so on and so forth. So we are revisiting this offering to highlight what we do best in terms of our offering of credit cards, credit current accounts, personalized offering in our dedicated stores, which are spread all over Brazil, also in terms of our remote and digital offering. And here, as I've been doing since September of 2022, here, we choose some of our strategic businesses, and we will detail their performance. So starting on the left-hand side with our credit card business, if you recall, for almost 2 years, our operation was decreasing, and this was not pleased to see, but it was something that we did consciously. This was part of the change in our portfolio. We need that not only we had to step on the brakes, but we had to earmark a portfolio because we were growing significantly in 2021. So '22, '23, there was a drop in the customer base that was necessary. But in the last quarter, we started to grow again. We double our speed of growth in this current quarter. So we are very pleased with the evolution of our credit card business. We are growing in terms of client quality. We are growing in terms of credit turnover and you see the growth in credit turnover in our fees line. You will see through Gustavo's presentation that we are very well positioned, particularly in credit cards. And we are selling a level of credit cards that is 2/3 of what we sold in the peak of our speed of sales back in 2021. But certainly now, we are selling -- having better knowledge of our clients. We have a good management of who comes in and who will merit an increase in their limits. So there was a great evolution in terms of data management and risk management as well. Therefore, we are very pleased with the current level of things. And certainly, I would say that it's been a year since we started growing the credit card business. And this is relevant for this year and moreover, for the coming years and quarters. And at the same time, NPS has been very good. So we choose to grow this business again, but grow with quality and customers being very, very happy. On the right-hand side, we talk about payroll loans. This is a business that I've been referring to for quite some time. payroll loans, we are growing in every single portfolio, individuals, government and INSS with all of the given challenges with rate limitations. This is one of the most competitive and dynamic products we have, maybe the most in our entire portfolio. But once again, we are growing with satisfied clients. And we are growing, providing a better credit quality. So payroll loan remains a very key part of our offering. This is the type of credit where we want to grow with our clients. And with that, we would generate not only principality, but we will be able to deliver better quality of credit. Now here in this slide, we highlight our consumer finance business. I was telling our employees that the consumer finance is even older than Banco do Brasil because the consumer finance transaction is over [ 60 ] years old. So it's been around in Brazil even longer than the bank itself. But even then, it is one of the arms that brings more transformation. We are making great strides here. Between 2015 and 2016, we took a major step. But now in '24, we are getting another big leap because not only we want to be ahead of the game. Certainly, this is -- we are not sitting comfortably in the couch, but we are working to evolve. We are the consumer finance company that is leader in the country. Our market total is 21%. And more -- even more than the quota, we are originating almost 90% of all of the entire auto loans or used vehicles in Brazil, well, we choose to do part of it, but we are able -- we are capable of looking at the market, and that's why we have a lot of data. Technologically speaking, we also evolved in terms of hiring experiencing -- in terms of hiring auto loan, we only need the CPF and the number plate of the vehicle. Just 4 clicks. So the experience to the dealership is amazing. So on average, the dealers would want to work with Santander because our experience is quite technological. We use facial biometrics and all of the experience that we need because the world is becoming even more complex when it comes to security. We also have super personalized offerings. All we need is the CPF and the number plate of the car. So we anticipate ourselves in terms of risk and the price of the operation. And we use a lot of events analytics. Again, we have inboard technology, favoring customer experience, and this allows us to deliver quickly and correctly, both in terms of pricing, volume and appetite. We have partnerships with 6 out of 10 largest OEMs, partnerships that involve our stake. We have a stake in some companies, and we also have operating partnerships in practical terms, they work the same way. And we are leveraging sales together, the sales of new and sometimes used vehicles together with the OEMs. We have a historical partnership with Webmotors, you might recall, the last year, we sold our stake to car sales. In practical terms, nothing changed in terms of the operation. We remain totally integrated, Webmotors is one of the largest auto portals in the world. So our partnership remains very solid and strong. In addition, we have a green consumer finance operation, and we are constantly embracing initiatives related to electric vehicles, flex vehicles, partnership with BYD and other players. Therefore, we are growing with quality, bringing ESG to our agenda on the side of the consumer finance platform. Speaking about Agribusiness in the quarter. If you look on a monthly basis and quarter-on-quarter, we had a record origination quarter. Our portfolio grows almost 20% in 2 years. And our origination also grows. If we look at the volumes this versus over 60%. We do that with a very high NPS score. And the quality of credit is even outstanding, outperforming the industry. Our NPL is coming down 0.0 percentage points. So NPS and credit quality and volume growing significantly. Here, we zoom out in our SMEs. Last quarter, I referred to the launch of a new service model for SMEs in practical terms to recap. So what do we do? We removed from the stores, the specialists for SME. So the manager is no longer sitting in the store, just serving a flow that not necessarily came from SMEs, but we reconnect these experts, and we put them down the road so they can cover a closer microregion. In the past, we would cover hundreds of kilometers, sometimes 50 or 60 kilometers of area that was almost impossible to cover. But now the range covered is much closer. So the experts are out of the stores, they spend their days carrying their iPads and visiting clients all day long. Therefore, we increased the number of calls. So in a few months, we just increased the number of visits. NPS increases because proximity multiplies NPS. And with that, we also have a better risk management because these clients on average are a bit more nervous. So being close to them is crucial. We can cover more clients, we are much closer -- and we increased the number of specialists by 25%. We do believe in this model. We are investing in people. So this is a topic that involves people. So we are increasing their headcount by 25%. We will have more experts all over the country, increasing our performance. And on the right-hand side, we have other figures, again, based on technology. We do not have a slide on technology alone because technology is part of everything we do. Technology is part of Select transformation. Technology is also part of free. It's part of our investment platform. And certainly, it's part of our -- the transformation of our offering and the delivery of our experience for SMEs and corporate as a whole. Here, we talk about automation, digitalization, we talk about guarantees. We say that almost we have almost 100% of digitalized customers, 94%. We talk about lead time. Lead time is decreasing substantially in some of the products that we highlight here. And the NPS continues to grow. I do not like 41% of NPS, but it's much better than the 20 some that we had in the past, but that means that we are moving in the right direction with more profitable vintages and more engaged and loyal customers. Here, we talk about investments. Investments, that's one of the main pillars of our strategy. I've been talking about that since the first time we met, I said that we had to diversify towards an investment platform. I mean, the bank never focus on investment as being the main pillar. But we want to change the funding mix of the bank. I mean, from being more concentrated in wholesale to be more concentrated on the retail side. I will show you more of the data further on. And we are very pleased with the results in. So starting with that lower part, we had important progress in retail. Retail has never captured as much. Of course, we want to do a lot more funding. We will move towards that direction. So a 5x growth in investment in the past year, that is very good. We are more consolidated, and that will give us continues to growth. I mean the base is growing more and more, and I hope to be bringing good news in the future as well. This is executable, and we will not be distracted in terms of retail. The zoom of retail is AAA. AAA is our advisory services. At first, we wanted to reach 1,200 advisers, but now the target has gone to 2,000. But we know that with 2,000 advisers, we will be able to provide unique service through AAA. It's unique because we offer a good base. It has a technological base, which is comparable to any other good experience available in the market and proximity is very unique. And I see -- I say that with no arrogance at all, our AAA service level is outstanding. Our design is very good. And with organic capture or funding of clients, we can even excel. This gives us a greater possibility to serve clients. We can talk more about it. We will bring net inflow. And we will keep an eye on our clients because all of the targets are very much aligned with client view, all of the standards related to correct sales and compliance helps us to grow the business significantly. We are very pleased because this quarter, we reached over BRL 6 billion. Of course, the bar is increasing. We reached BRL 6.5 billion, and the number per adviser is 4 million users in the quarter, and this number as well compares quite well with the market numbers. And for all investor clients and individuals, all individuals starting in June, they will have a new digital experience. Renewed is almost like a new portal with profitability experience, usability experience and different menus and usability, everything at a different level. And we were pleased with that evolution. And with that, I will call Gustavo to talk about the results, and then I will come back to talk about the closing remarks for the quarter.

Thank you, Mario. Good morning, everyone. Let's talk about our results. NII continues to expand year-on-year, growing 11%. This reflects the evolution of our strategy on both client and market NII. In the quarter, client NII benefited from an increased volume, which offset the effect of the Selic interest rate on funding quarter-on-quarter. The variation in the quarter is basically explained by the variation in the Selic rate and the mix, especially the non-revolving card portfolio with [indiscernible]. In market NII, on the other hand, ALM operations progressed as planned and continue to see positive trend for the years we have been mentioning in prior quarters. The reduction in the quarter, the market NII reflects a lower result in treasury operations due to effect of market volatility observed in this quarter. We see long-term sustainable expansion with active risk management, price discipline and technical rigor when making resource allocation decisions. On the next slide, as mentioned, we show that our loan portfolio grew by 8% year-on-year with a positive evolution in all segments. In individuals, the portfolio grew by 1% with a balance between higher and lower risk products, with the highlight going to the cards portfolio, which grew 4% in the quarter and payroll loans, which grew 2%. Actually, in cards, as Mario mentioned, we are increasing activation and gradually expanding our client base. As for payroll loans, we continue to increase origination more and more through our own channels with a 21% increase in share in 2 years, which gives us greater profitability. With regard to auto loans, the market continues to be buoyant, and we are keeping up with this trend. We grew 4.5% in the quarter and have seen before with our well-adjusted portfolios. In SME, we saw significant increase in the portfolio, a segment that we prepared to grow at a good pace as we saw before, based on our team and on technology. The large corporate portfolio has benefited from the exchange rate in the quarter. And here, we continue to maintain our profitability discipline. Moving on to the next slide, we present our funding performance. Our liabilities plan continues at a good pace aimed at improving the mix of client segments and funding instruments. We recorded growth of 3% in the quarter and 10% over the previous year. I would like to highlight the 4.5% increase in the quarter in demand deposits as well as the good growth in term deposits, savings and letters of credit. The strategy of increasing retail exposure in our mix continues to make progress. And as a result, we have seen an increase of 2 percentage points in the share of individuals over the last 2 years. As we have mentioned, this is a structural and gradual change, and we are pleased with the evolution of our strategy. To close the slide, the loan-to-deposit ratio is at an all-time high, reaching 93%. I will now comment on the performance of our fees and commissions. We reached all-time highest this quarter as a result of our revenue diversification strategy. Our quarterly growth was 6%, and our annual growth was almost 18%. I'd like to highlight the 7.2% growth in cards in the quarter and 13% growth in the year, showing this resumption. Insurance, current account and assets all showed increases of more than 4% in the quarter and significant year-on-year growth. Another relevant point is that the securities brokerage and placement line item continues to grow, driven by debt issuances, which grew 12% in the quarter. In the line item others, the biggest quarterly increase came from the savings bonds. Regarding the quality of our assets, we continue to have a controlled ALL, allowance loan losses with a slight drop in the quarter, which, together with the increase in the portfolio resulted in a cost of credit of 3.7%, accumulating a reduction of 80 basis points in 12 months. NPL formation showed a positive performance, reflecting the better quality of our origination standing at 1.2%. Lastly, due to the better quality of the vintages, the renegotiated portfolio is already more than BRL 5 billion smaller than in Q2 '23. We posted a reduction of 150 basis points in relation to the total portfolio last year. Now moving to the next slide. Here, we provide details on the performance of our delinquency indicators. Our loan branding remains more balanced and the portfolios are duly adjusted. The short-term indicator improved in all segments. In the long-term indicator, we saw stability overall. We saw an improvement in individuals and the opposite behavior in companies, increase in SMEs is concentrated specifically in what we call [ E1 ], which includes companies with an annual turnover of up to BRL 3 million. This behavior is partly explained by the renegotiated portfolio, as mentioned in the previous quarter. However, it is important to note here that the short-term indicators have been adjusted, which suggests a more positive trend ahead. On the next slide, we have details on our expenses. We continue to make progress in our quest for efficiency, focusing on cost control. During the quarter, total expenses remained stable. The increase in administrative expenses is due to a higher volume of data processing by virtue of the growth of our business, and this was offset by a reduction in personnel expenses. In the year-on-year comparison, the growth in expenses was below that of revenues, helping to increase our operating leverage. As a result of our effective management, we saw sequential improvement in our efficiency ratio, which fell by 4 percentage points year-on-year. To conclude the earnings results section, we present our income statement. Year-on-year, we saw a 12% increase in total revenues, driven by NII and by a good performance of fees and commissions. Provisions dropped in the quarterly and annual comparison, and we maintained our strict control over expenses resulting in a profit of BRL 3.3 billion. This represents an increase of 44% in 12 months. We ended the quarter with growth in profitability with ROE of 15.5% in Common Equity Tier 1 of 11.2%. Finally, I would like to highlight that we are focused on a gradual resumption of our results, which have evolved and keeping with our expectations. Our goal is long-term sustainability with solidity and consistence of our results. That concludes my part and I turn the floor back to Mario for his closing remarks.

Thank you, Gustavo. So just to close quickly, so we can start the Q&A. And I'm sure you'll have more questions and I have 5 take-home messages connecting with everything they talked about, everything we've been talking about. We don't have a lot of new elements in the strategy, which is good. It shows we are consistent in what we designed. In 2022, 2023, we're focused on designing the bank we want to have in the next 5 years and beyond. And this summarized in these 5 pillars, we want to be most present bank in our customers' lives. This is the main moto. It cascades down and all the rest. We're going to have primacy using intensely our technology. You'll hear more and more. We're talking about technology as the main enabler so we can have principality. We want to have the right customer experience and the interconnection among the channels. Free offering is the answer. It's a powerful tool for mass income offerings, will bring more activation, more conversion, more margin, the right margin and the right assets and not the short-term margin. We will be counting less on [indiscernible] collateralized products and on cards in the offering, given that cards represent a lot in principality and usability in clients' day-to-day relationship with the bank. We'll consistently advance our strategic business, and we'll continue consistently work for nonlinear growth because our market is not linear with consistent solid growth with quality. And this translates into a mid- to long-term view of profitability, one, two steps at a time in the right direction so that we can grow with speed where we believe we can grow with speed to deliver solid results, as Gustavo mentioned. With this, I invite you for the Q&A session.

Thank you, Mario. Thank you, Gustavo. We will now start the Q&A session. [Operator Instructions] The first question comes from Brian Flores from Citibank.

Camila and Jean. Thank you for this opportunity and congrats on your results. My question is on SME. You talked about changes to your model, and it is very clear to me what you've been doing. I would just try to understand a bit better why did we see delinquency increasing in the quarter? And so if you could elaborate a bit more on that issue, that will be useful. And also, if you talk about the performance of the sector, the dynamics, that will be very good.

Brian. Well, I will start and then I'll turn it to Gustavo. First, I will refer to the strategy and how this connects to the risk management that we've been doing for over a year. And finally, I'll refer to the numbers themselves. We've been talking about our strategy, and that means that we want to double our business of SMEs in the next few years. I cannot give you the exact date, but certainly, it cannot be in 10 years. But in a few years, we want to double our business because we believe there is room for that. And we would do that not linearly because this is not a mathematical equation, but we want to double the size of the business. Just as a reminder, in December of 2023, we had already doubled the numbers vis-a-vis 2021. So we doubled that number once and we want to double it again. But certainly, we will do that the correct way. And this applies to every segment of SMEs, but certainly, there are different clusters. There are small, small companies, small midsize and we call them in the bank companies 1, 2, 3. In the very small company segment, company 1, we needed to renew our service. And I already talked about that during my presentation, and I'm pleased to know that you recognize that. We believe that we have something much better now. And certainly, very soon, we will have a business of small, small companies that will grow in a very sound and consistent way. But how does that connect to risk management? The fact that I have some thousands of experts spread all over Brazil and knocking the doors of our clients, so to speak, means that our marginal risk management is much better. And this also allows us to manage our inventories much better. How do we -- how are we managing small companies and individuals in the last 12 to 13 months. Since the second quarter of last year, we changed our renegotiation policies, and we've been referring to that. We are not so open anymore to renegotiate debt with no cash components. We are being more restrictive in a way that we allow the renegotiation to roll out, a portfolio of 5 billion reflects a more sensitive agreement policy, which is very good for the health of the portfolio, and it's also good because our derisking is more accelerated in terms of the portfolio. And some rates are affected because we are not rolling over anymore. But I can turn that question over to Gustavo, but this stems from a more asset, so to speak, management of our legacy portfolio. I mean this legacy portfolio is more predominant among individuals, but more so with very small companies. That's why raising the bar in this portfolio allows us to touch in some ratios or indexes, but this has to do with a new generation of very small companies and more to do with that inventory.

Brian. And then you can -- you will also notice that NPL 15 to 90 of this segment is under control. It's performing well. So in terms of legacy portfolios, and as Mario was saying, with our new renegotiation strategy, I mean things are very clear. And NPL 15 to 90 and the new vintages performance is very good. So it's a one-off thing, and it stems from what Mario said before. And NPL 15 to 90 is performing well. In summary, it has more to do with the portfolio derisking rather than marginal origination. So I would say margin origination tends to be a better quality, not only because of the policies, but with everything else we did, especially after 2022, and the new model will help us because the new model will increase proximity, something we didn't have as much with our clients. I mean, look at the number of calls that we have now. And I assure you, we want to increase the number of visits, not only increase the number of visits, but visits with quality. I want my experts almost like camping in the house of the client. This will not only increase volume but results. I hope I answered your question.

Okay. Our next analyst is Daniel Vaz from Safra Bank.

And congrats on your results. I would like to take a second look at the spreads. I will split my question into your portfolio mix. And now I see you're accelerating mass income and also high income has become your priority. What would be the behavior of your spread? First, looking at client mix? And secondly, looking at the rates from your peers, I mean, tight rates in terms of payroll loan. What will be the progress of your spreads going forward?

Well, certainly, when we look at the spread, we look at the gross profitability of the portfolio. But we are taking a deeper look to the profitability of the portfolio I'm generating. I'm not saying that we are not interested on the spread, spread is important. But I do not want to demonize the portfolio -- the credit portfolio. I mean, the spread comes from several dozens of percentage points. It could be 40% to 42% annual, but I do not want to rely on that spread because the net spread of provisions is not a good spread. So of course, there will be a certain amount of personal loans that is very much connected to the payment journey. So personal loan that is disconnected from principality from the credit card journey, from the journey of transactionality of PIX because it's becoming just one single thing. We call it a payment journey or consumption or consumer journey. So in terms of portfolio, midterm view, it would have less risk in terms of mix. So credit card would be the major clean element of my portfolio because it's crucial to have a credit card as a clean element. It doesn't mean that I'm going to open to everybody at a volume of BRL 100,000 per client. I will accept having lower limits when compared to my historical levels, and I can only do that if my unit cost falls quickly because this is an important evolution, and we will talk more about that further on. But the credit card has to -- has to be the clean element of their offering because this translates the clients' connection with the bank on a day-to-day basis. But this has to be based on collateralized instruments. And we want to have all of the other things coming from that. I mean home equity that we call Usecasa, we are already leaders in home equity in Brazil, about 25%. And I don't think that's enough. I think that the portfolio is not so relevant. But I think we can do a lot more in terms of structured financing, but the pivoting point would be the credit card. So we will migrate to less risk. And if the price to get there is the nominal spread, I'm not going to struggle because the net margin will have much better quality, and this will certainly be translated into the bank's profitability. Our design is -- profitability, et cetera. So I will grow with profitability. So therefore, I will look for an equation that involves a net spread. On the liability side, I mean, the NII comes on the right and the left side of the balance sheet. So we are getting a cheaper funding for the bank. Maybe in 1 quarter, I may give a leap. But in some years, we will see some gradual improvement, I mean, individuals versus corporate. So retail funding for the entire industry is cheaper when compared to wholesale funding, many percentage points of CDI is cheaper. And as we gradually improve quarter-on-quarter, we will see an increasing margin on the funding side, even I mean, CDB that has a lower spread, but we will have cheaper funding of the money that remains in the account. So the mix is much better. One point that I would like to stress is that we make a decision aiming at the performance of the portfolio. It's not spread alone, but how the performance evolves in terms of profitability. So the decisions we'll make for client and the combined product looks at the evolution we envision for the portfolio, aiming at profitability.

If I can do a follow-up question. You said that the pivoting element is still the credit card. We see a digital competitor of yours doing PIX finance as an embedded product in the credit card. How do you see that product and whether this is also part of that mass income product of yours?

Okay. Great question. Well, thank you for raising that issue. Whenever I say that we -- our view is based on the journey rather than the product alone. I'm not phrasing A or B, but that view that the client no longer wants to have a product relationship with the bank. This is something that is here to stay. I mean there is no going back. A client, they want to have a journey relationship. And the main journey that individuals want to have -- I mean, corporate will be the same. But the main journey that clients want to have with us is transactionality. And with transactionality, there is no distinction between overdraft account or credit card account. It has -- we have to offer an integrated limit. And so no matter how they consume things, consumption defined as supermarket purchases, payment slips and PIX transactions. At the end, everything boils down to transactionality and everything has to be integrated. We have a very clear design of payment journeys, and we are working towards having the best journey in the market in just a few months, and we will deliver that. So certainly, the short-term view is to have a unique journey. So together with the PIX journey, which is a very simple and very seamless journey in the market, the entire payment journey will be integrated with the card.

We will now switch to English with Jorge Kuri at Morgan Stanley.

Thanks for taking the time to answer questions, and thanks for the presentation. I wanted to ask about market NII, and you did BRL 258 million this quarter, which was down sequentially, to what extent this number going forward is a result of market volatility? And to what extent is the result of the absolute level of rates. There's evidently been a big shift in the way the market thinks about selling rates going forward. If indeed the consensus is right and Selic stays at 10.50% throughout this year and next year. How much of a recovery can we see that number from BRL 258 million that you did in the quarter?

Thanks, Jorge. Pleasure to speak to you. So although we don't provide formal guidance in terms of how we think about the numbers, this number has 2 components, like Gustavo mentioned and you know well. The first number is our ALCO portfolio, our ALM. And in that portfolio, we have been repricing our funding of retail, the retail business for a few years already. That's the piece of the portfolio which with higher rates very rapidly in Brazil between late 2022 and 2023. That piece of the portfolio suffered. You know well, we explained it every quarter. That repricing of the retail funding of the portfolio, the margin of the front book, as we call it, that repricing has been undertaken basically, and we are going to keep progressing on the results. So we don't have any cost to be paid on that repricing. The repricing is fully implemented. It took us 18 months, give or take, which is normally the speed. So that's the piece which Gustavo mentioned that we should keep progressing through the next few quarters and obviously as we enter into 2025. Yes, the dynamics change with the Selic rate now at 10.50% probably throughout late this year and most next year, who knows. But that impacts mostly the funding of our back book, which is how we basically invest our capital. So the funding of our capital is going to be made at a higher rate than we felt before. So that margin is lower than what we expected. But the overall, the juncture of how we price our front book, how we fund our back book, we view positively in the next 2 quarters. So I would say it's not a guidance, but the outlook should be constructive as how we see that piece, which is a big piece progressing over the next 2 quarters. The second element is market making, as we call it, which is the way we handle and square the risks arising from our markets for our sales and trading business. And that's where we capture the volatility we saw in the second quarter. It was, I would say, a tremendous volatility globally, but in Brazil, particularly with nominal rates going more than 100 basis points up, nominal rates going maybe 50 basis points up effects, et cetera. And that obviously caught us partially. We still made money in that business, but less so than in the first quarter, where we had actually a seller production. It's harder to predict a business which is on the squaring of businesses from clients and that depends more on market volatility and how we capture that. We view that business positively. It has been a strong component of our P&L delivery, Jorge, but it's hard to predict the direction. It's obviously not linear. But we feel positive as to the way we run our VARs, the way we have our franchise established. We are the #1 franchise for FX in Brazil, #1 in rates. So we do have a lot of flows to capture, and that should allow us to trade that to square those positions well. So we view that positively. But it's -- again, it's a business which is harder to predict. The ALCO business is easier "to predict" and we view that constructively, like I said. I'd say overall, we feel good about our markets NII through the next few quarters. But again, there's an element which is market dependent, which us and no one else can precisely predict, but we feel positive about the overall line.

[Foreign Language] Back to Portuguese with Mario Pierry with Bank of America.

Congratulations on the results. Many positive trends here, operational trends, but I'd like to focus more on fees and commissions. The fees and commissions in the last 4 years, not growing. And in this quarter, we saw a significant increase, particularly in current accounts -- checking accounts, and I would like to understand how you see the dynamic of this line item going forward. Particularly, the growth will come from volume or price? How do you see competition holding back prices? Is there any room to increase prices? Or have we achieved a price level that has decreased enough and there's no more room to decrease.

Thank you, Mario. I will start and Gustavo will complement. Of course, we are happy with the performance of our fees and commissions. It is true. We had modest growth in fees and commissions for quite a while. Again, we built a successful business in 2015, 2021 cycle based on credit growth. But we grew other line items too -- the loan book grew, and it's clear to us that we have to support our loan book with a more smarter and more diversified credit. And I don't want to suggest that we are going to grow 6% quarter-on-quarter in every quarter. Of course, we are progressing, and we want to continue to grow on average in all quarters, but the fact that we grew more significantly in this quarter as a result of a number of things. A number of seeds, we've been planting for a while, there was no great one-off element. In the past, capital markets was the only one, and we have a franchise to capture that. It was a good progress, as Gustavo mentioned. As for the transactional part, which to me is the most recurring element, the most replicable element when we look at the lifetime value of the account. You mentioned cards. I know you asked about checking accounts. But cards to me are a very important element because they have a progressive gain in client base. As I mentioned, we grew 6% year-on-year. So it's not a huge number, growing 6% plus higher spending per client, higher turnover by client, both are very powerful. But an element we didn't speak about, but which is also relevant. We talk about expense management, managing our expenses correctly. But there is an important management to reduce costs of those operating expenses, expenses directly linked to sales, that we sometimes recognize a reduction factors for margins and fees and commissions. And we're also managing that. Now talking about checking account. That's an important question you asked. We grew checking accounts in a market where supposedly there should be no fees coming from checking accounts. So how come we are growing in a business that clearly should be 0. I don't believe that we will continue to grow in the line of fees and commissions for the next 5 to 10 years. It is very positive what we are doing. It's not by chance. We're doing this for 2 reasons. We're bringing in new clients. We are bringing new clients in packages where clients except to pay fees and commissions. And there was also some repricing also for legal elements. So we have new clients on board in individuals and companies. In companies, we can bring these clients in components of combos. It have been adjusted by inflation. So we adjust for inflation, plus more clients that accept paying some fees. And of course, that pumps up the fees and commissions. So the growth you saw as positive. We are happy about it, mainly in companies and in individuals. In my very long-term vision, we should see this line item together with other transactionality lines, the cards, cash and payments as a whole and by not acquiring, which is a key product, prepayment. So I spoke a lot about a focus on journey for individuals and companies, it's all about transactionality, cash collection, prepayment, Getnet, in our case all more integrated. And all of these will evolve to a more powerful combo view that we will price more and more focused on the client. And we'll play with the lines in a way, Mario, that will allow us to win as a whole. And of course, volume is important. The checking account is important, but our focus less in gaining in that line, but in gaining as a whole in fees and commissions of profitability per client, but it is a positive movement in the quoting.

Now we turn to Matheus Guimaraes from XP.

Camila, Mario and Gustavo congrats on your results. Referring to Vaz's question, I would like to hear more about personal loans. And you also said that the spread or the margin after provisions is not healthy. I mean it's less healthy than it seems even though spreads are higher. Does that have to do with the cost to serve. How do you compare that with other fintechs and competitors investing in this line. I think this is more focused on personal loans.

When I talked about personal loans, I mean, personal loan involves 4 major portfolios. We have the clean personal loan, and I answer that part when I answer Vaz's question. Our ambition to grow is moderate, given the fact that the vocation of this product, in my view, should be the one that boosts principality and loyalty. The personal loan product that we have, not necessarily adds principality or delivers results. Of course, I'm referring to the average. I'm not saying that any personal loan does makes no sense. But it's a product that -- usually, we have a lower share. And we are not worried about that. So in all my leadership meetings with my team doesn't have to do with how I double my personal loan share and talking about collateralized personal loan or on the investments. We talked a lot about the payroll loan portfolio, which is huge. But I do not want to have different ratios in these 2 particular loans. And there is a fourth personal loan that I really want to reduce, which is the renegotiation portfolio. And that's when we combine all portfolios, especially from credit cards, over drafting accounts and more structured funding, and then we bundle everything to renegotiate some debts that even have a haircut. And this personal loan is coming down. And part of the margin -- part of that margin equation has to do with the drop of this personal loan reorganization. It means that the numbers are healthier now. I cannot speak about how other competitors see that product. But in our view, personal loan is something that is auxiliary to the entire payment journey. And the clean personal loan is seen by us with a certain degree of limitation. I mean, clean personal loan is just part of our portfolio -- that clean personal loan is part of our portfolio -- a balanced portfolio. And with that balanced portfolio is something that it would just in limit. So personal loan is just part of that. This is very important. It's not a stand-alone product, but it's a product that is part of a portfolio and long and -- mid- and long-term profitability and sustainable growth. So we are not so much concerned with the evolution of that clean, but that's part of a risk portfolio and how we weigh that portfolio so that we arrive at the best possible performance and certainly serving the client.

Now we go to Thiago Batista from UBS.

Can you hear me?

Yes.

Camila, Mario and Gustavo. My question is about margins. We talked a little bit about margins. When we look at the third quarter -- I mean, the first quarter, the margins were positive. I mean the only thing that disappointed me a bit was the growth of NII. In the Spanish call, they indicated that the margin in Brazil will grow and before it was in the high 10s. I would just like to understand what will be your dynamic going forward. I know that Brazil uses GAAP, there is GAAP and IFRS, we will see growth of margins in the quarter. So what kind of dynamic in terms of NII should be expected, whether we would see them gaining momentum in the next quarter or not?

Okay. Great question, Thiago. Without giving any guidance, of course. If you -- if we look at the funding margin, this quarter, as Gustavo said, but I would like to reinstate that point. Of course, we would rather have a client NII that grows more, of course, and/or in NII as a whole that grows, we are working on that, and we will deliver it. But starting with the funding client NII, the detractor factor of the quarter was basically the proportional fall of average CDI compared first and second quarter, we compensate part of that with volumes. I would say that the mix also had a positive evolution. Therefore, our evolution. And I would like to call it -- I mean, the average spread measured as -- our average spread is evolving in the correct direction and this compensates for the drop in CDI per se. I mean CDI, it doesn't change from now to the end of the year, which is the base case of the entire market and ourselves, and we are also included in that we will not have a detractor factor of CDI. So we will continue to work hard to grow volume, to grow mix, bringing more clients and more time deposits with a mix more earmarked towards retail. And so we will see a difference in the funding client NII in terms of regular client NII. It has to do with CP reorg goes down, and we do no longer have that NII element, I mean, that I would rather not have. So we will continue to see the positive evolution of the reorganized portfolio, and this is good, and we will try to mitigate that by increasing the portfolio that aims at gross spread. But as I said before, we want to do that in a way that after provisions, we can grow in the correct way. NII -- client NII, we should have a positive evolution in the next quarters. So this, coupled with funding, we will grow client NII. It won't be linear because it shouldn't be. But we will grow sequentially with the bias of the mid and long term rather than the next quarter. We want to deliver good quarters, certainly, but we want to deliver a very sound and consistent bank with a very diversified portfolio. And this has to do with a growing client NII.

Next question from Pedro Leduc from Itaú BBA.

Mario and team, congratulations on the results. Speaking about revenue lines, I'd like to ask about the cost of risk, the ALL was slightly below despite a higher loan book with a good NPL formation. SME is not so much to the ALL level is stable at almost BRL 6 billion. Cost of risk is [ falling ]. So I would like to ask about what do you think about the next 6 months in terms of NPL ALL level acceleration of the portfolio. SMEs being a point of attention. And the second part of my question. The JV was considered a reinforcement for ALL. Is it something that you wanted to do? Or was it just a good place to allocate it? I just wanted to get a sense of the coverage ahead.

I'll start with the second part. Thank you for asking that, Pedro. I'll start with the second part, and then I'll turn the floor to Gustavo. So starting -- it's a good thing you asked about this, actually. The fact that we have this gain of BRL 1.9 billion in our VA, VR operation. It's circumstantial. Of course, it's part of vision, Pedro. What we want to extract value that is kind of hidden in the pricing of the stock. Not that because it's noncore because these are small elements in the franchise and in the results. When we have Webmotors operational last year, we want to make value Webmotors, one way or another, that flowed into the results, we were in the most acute phase of purging the portfolio. Now we are in a more mature phase of management, the old portfolio and derisking. And why did we provision for that? Why did we reinforce the balance sheet? Because we could do it. We wouldn't have done it if it weren't for the advent of that joint venture. So to answer your question, we didn't think that we needed to do -- we were not worried about the coverage of the portfolio. You mentioned the evolution of the indices, and prove -- that's proof of that. But we thought that we had a clean result to deliver, a clean result in terms of being recurrent, diversified in the right direction with from quarter year-on-year growth. So we didn't need to flow this to the result. We decided to be prudent and reinforce we need to do it, but we could afford to do it. And so simply put, that's it. And I'd like Gustavo to comment on the performance.

Pedro, and it's exactly what you said, all of our indices are ratios, 15 to 90-day, NPL ratio at a good level. The vintage is performing well. We are growing the portfolios where we want them to grow. We didn't change our risk appetite or we are growing at a good pace in the portfolios that have been growing in recent quarters. So the ALL trend is positive at this point, and we have no surprises. But we knew it was already in the 15 to 90-day NPL as you mentioned, SMEs. That's well balanced adjusted. Looking forward, we'll continue to grow the portfolio with this kind of credit quality that we have. There was a change that we talked about, and this is already reflecting in our allowance for loan losses. That's all established. There's no nothing new because that's all established. It's already seamless. ALL is very correct and adjusted in all senses, but will grow the portfolio. The performance is doing well where there's some noise we can fully adjust. We don't see anything different in the quarter, but that's the trend. But again, the ALL volume will be the result of the volume of the portfolio that we are growing and how it is made up in terms of every block of business and [indiscernible] that. We see all ratios performing well, and we are comfortable we will grow in the SME portfolio during the quarter because it's all adapted also we wouldn't grow [ 3% ]. So that's the trend in ALL, and the cost of risk will evolve positively.

And there's something here to highlight, Gustavo kind of touched on it. But let me add that during the presentation, I kind of mentioned what we're doing with technologies. So please allow me to digress a little to stress the point. Today, we have the ability to react to adjust up depending on the audiences that I want to work with, not going to say appetite, but marginal increases in terms of loan granting, but also to reduce credit. So when looking at the board, that limit in loan granting in every product in every segment, we are looking at that every day, every week. What changed from the last -- in the last 3 years. In the end of 2021 to '22, we stepped on the breaks. We took months to implement something now, we take a couple of weeks to implement a change. It might sound a lot, the 2 weeks is that agile as a diligent analyst. You know that our ability to move this big bank, this cruise in terms of policy decision and marvelous decision. Doing that agile with agility that evolved a lot in the last few years. So we can test the border more dynamically because if we make mistakes, and it's part of the business to make mistakes, we can adjust quickly. And when we realize that there is an audience, we shouldn't be giving loans still we can quickly make a change. That costs very little to us. So this evolution has everything to do with technology and how we deal with our policies and credit models. That's an asset that we have now that we didn't have to 3 years ago, and that helps us in the policy of recovering and our ability to do fine-tuning credit management. Thank you very much.

We are going to give the floor now to out Yuri Fernandes with JPMorgan.

My question is similar to credit card users and it cycle in Brazil. I think they do in a different moment, you stepped on the brakes before -- and at the systems level, this NPL discussions, some [indiscernible] in SMEs. But I think that Gustavo's message is clear that your NPL is well behaved, but I'd like to understand about the system. How do you see it, not just in terms of NPL, but in terms of growth as well, there's a lot of discussion. We see favorite brands research, reviewing growth a little up, but with somewhat higher interest rate. So I'd like to understand how do you see the cycle at the Brazil level? And how will Santander serve that cycle? Because like I said, even a slightly different position than the average peers that you stepped on the breaks earlier.

Okay. Thank you for the question. I'll start, and then I'll give the floor to Gustavo. When we speak about strategic business, I always choose a few to comment on in the call. Some are related to credit, but we have other strategic business deriving from credit fees and conditions, liabilities, so on and so forth. So I spoke about where we are evolving, where we are gaining share, but Yuri, it's a good thing to earn share. Of course, we prefer to earn share then lose share. We are gaining share in current and consumer finance and payroll loans. But we don't wake up in the morning thinking I have to gain 1, 2, 3 points this quarter. That's not -- we're going to grow with profitability with the right mix in a sustainable fashion. But we don't define in our evaluation model for the management, then we should grow 1, 2 points more than FEBRABAN. Now FEBRABAN is talking about something close to 10%, but I don't want to give any guidance, but we want to grow in line with the market. I do want to say, "Oh, I'm happy to grow half as much as the market, of course, not, but in line with the market in the products that we choose to grow and I call these strategic businesses, we're going to grow more than the market. But now because gaining share will define our success because in a strategic approach of mix and how we want to grow the bank, we're designing the bank for the next 5 years. We deliver it every quarter, but I'm designing the bank for 2028. So this bank has to have a different credit mix, different credit mix, when having some more claim personal loans. This product will lose relevance over time. It's not the most relevant in margin. It will lose. It doesn't mean I'm doing a bad job and payroll loans that are collateralized the home equity. Home equity can grow twofold have a portfolio of less than BRL 6 billion. So this portfolio can grow to BRL 10 billion very quickly or maybe BRL 50 billion plus, which is what we have in mortgages. So in this mix approach, we intend to grow more than the market and product. And on an average, we will be reasonably in keeping perhaps 1 percentage point more. They are the state-owned banks. I'm speaking about the whole industry. I'm not going to give any names, but some state-owned banks with an appetite, which is marginally higher, which is natural. These are cycles. I think state-owned banks make -- do a super important work, they act in some industries, sectors which are huge, such as housing, Agribusiness is interesting to us. In housing, we compete less but in Agribusiness we compete and we want to continue to grow. But in Agribusiness this year, we'll grow with less ambition than in prior years. You will remember that we practically doubled 98% to portfolio growth between 21% to 23%, with BRL 53 billion at the end of last year. Now we're growing all through accrual rather than growing the portfolio because this is a more challenging year for Agribusiness. There's nothing wrong with that. It's been the cycles. We are not faired. So we're not going to be growing 20%, 30% as we did before. And it's all good in Agribusiness, we might lose a little share due to a correct decision about managing the portfolio. So I hope I kind of give you a macro view. Gustavo, do you want to add.

No, that's exactly, of course, we look at the market, but we have our own portfolio mix ideally, it is a dynamic portfolio mix. So we measure performance of all of the portfolios, thinking about the products and thinking about the clients. So very dynamic, we have target of profitability, how it's made up might be different. We migrate as much as the market. But with a different composition, both all about actively managing the portfolio and measuring performance daily of everything, it's all very dynamic, we are not focused on growing more as we're focused on doing the right thing, the right makeup that will give us the best result. Our macro environment and business environment and always decomposing individuals and companies. This is now -- if CDI stops dropping, it doesn't help, particularly for companies. CDI at 10.5% still high. We don't pay that. There's always a CDIs in terms of market funding. So legal entities on benefit from interest rates that do not decline. And for individuals -- the individual risk appetite for individuals will not go back to the level of 2020, '21, because we had an oversupply of credit because there was this perception that COVID did not have an effect on disposable income. As an industry, we got that wrong in it that we had new competitors offering new credit to clients but all of that evolved, I spoke about this in Pedro's question. We evolved as an industry in terms of not allowing supply, particularly to low income clients. I don't think that for individuals, there will be an accelerated resumption as service indicate. I think everyone is going to be more prudent loan granting. We have been prudent and still we are growing, but with a smaller audience and with products with a different mix, as we said before.

Last question from Eduardo Nishio from Genial.

Mario, Gustavo and Camila, my question relates to this last one. It's more related to your journey to improve sustainability, diversification and profitability. I think Mario since 2022, you have ROE at the end of 2022 was very low. And then you started resuming profitability. There was another quarter with a drop. But in fact, this profitability is improving. And it has been improving more quickly this year in the last quarter. But my question is where do you find yourselves in this journey? I know that this is an endless journey. But in terms of the objectives that you lined up, during your administration, Mario, where do you think you are right now in that journey? And where do you think you still have some catching up to do what segments -- you believe that profitability could be improved in mass income or credit cards. And whether you could also tell us about incumbent banks that are operating at higher ROE. And when do you intend to catch up with these banks?

I will answer without giving any guidance, okay? That's a very good question. Whenever we talk about profitability, certainly, this is a key element of our strategy. I mean, the strategy is not just profitability because profitability is just the result of a strategy. And I've been repeating that because we have to have a better balanced credit portfolio, more recurring, more fees, funding and all of that combined to deliver a good client strategy. And we haven't seen that happening so strongly in -- at least in the last 9 years where I've been with the bank. Eduardo, some quarters ago, when you and your peers would ask me, you would say that we were in the low teens. I mean we were generating economic loss, I mean profitability was below cost of capital, and that was not sustainable, but it was part of the cycle. We had to go through that. We were not proud of it, but we had to go through it because we are now doing the right homework, we have to look at the cost of capital. We were doing that even before some of you started asking us about that. But in the first quarter, we were able to show some economic progress, but still not what we wanted to have 1.4 percentage points of gain every quarter. But it's not linear because that's not part of our business. But the bank is it with the right levers. And we are just measuring the acceleration pace in every segment. So we want growth in both sides. We are not going to let go of profitability in favor of growth, because even though we want to deliver good quarters all the time, we are not going to let go of 1 in favor of the other. So we reached that level of mid-teens. We want to consolidate that level. And from now on, what will be the next level, mid- to high teens. So in the next quarters, we will gear our operation to that end. I'm not going to say that it will be in the next quarter, it will be quarters and not years because if it takes years for us to reach high teens, it wouldn't be advisable. So we will add mid- to high teens in the next few quarters until we reach something rounding up to 20%. This a very clear objective. I'm not going to tell you whether it's going to happen in x number of years. Obviously, it's not going to come in just few quarters. it could happen, and we will work to that end in a timeline of short to midterm. But more importantly, Eduardo is how we are going to get there. if I'm saying, okay, I'm going to do 20, that's cool. But certainly, I think this is what you want to hear myself included, but we have to do that with a different portfolio construction when compared to what we did back in 2021 in some quarters. It's not bad that we reach 21 plus, but that 21-plus that costed us low teens of ROE. This is not where are going to be. So the speed will be different, but it will be very consistent in a mix that I guarantee you will be very different. I mean, of course, challenges will be on the way. Our business is very dynamic and complex with exceptional competitors, both incumbent and digital competitors and consumers are looking at us forcing us to innovate all the time. So there are challenges coming from all of -- many different directions. You know that this also includes human and intellectual challenges, and that's very nice. We discussed with the Santander Group all the time because Brazil is almost like an indicator KPI for the world. But we are aiming at a mid- to high teens level and then to be in the 20s and to the time, we will evolve and we will certainly talk to you about how we're getting there. Thank you.

Now I would like to thank all of you for joining us this morning. So after this video conference, myself and then the entire IR team of Santander Brasil will be available to certainly answer any pending questions. Thank you very much. I wish you a very good day. [Statements in English on this transcript were Spoken by an interpreter present on the live call.]