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

Good morning, everyone, and thank you for joining us for our 2024 Closing Results Video Conference. We are live from our headquarters in Sao Paulo, and we will be dividing this event into 3 parts. First, our CEO, Mario Leao, will talk about the main highlights of the year and the directions for our growth in the coming quarters. Next, our CFO, Gustavo Alejo, will present a detailed analysis of our performance. And finally, we will have our Q&A session. I will now give you some instructions. [Operator Instructions] The presentation we are about to give is now available to download from our IR website. And now I'll hand over to Mario to start the presentation. Good morning, Mario.

Good morning, Camila. Thank you. Good morning, everyone. It's a pleasure for me to be here once again to talk about the closing of 2024 and the fourth quarter results we hear live from our headquarters is 10:01. I would like to start by highlighting, as we always do, I mean, the overview of the quarter and also consolidated figures for the year-end. Starting with the numbers. As you already noticed, we delivered BRL 3.87 billion or BRL 3.9 billion in net income. This is another step towards the right direction. It's a number that grows quarter-on-quarter. In the interannual comparison, this number grows even more. And so more than the result itself, which is positive, we also grow in the way we generate the results. We will have the opportunity to share with you the quality behind the numbers, and we are very pleased to deliver that profitability. This is a clear note that how we are growing. We are growing 17.6%. This is a good evolution quarter-on-quarter. and the evolution that will come of many percentage points. And how do we do that? Well, here, we highlight just a few ways. We have a very strong growth in our NII over 100% in terms of interannual, even more 16%. We will give you more details further on, and this represents gains in terms of assets and liabilities or funding. This has to do with our deposit accounts, but this is a disseminated growth with great pricing discipline and great discipline to grow our balance sheet in a very correct and technical way, seeking for profitability quarter-on-quarter. Fees, great strategic focus, and we've been talking about that consistently as we posted consistent growth in almost all lines quarter-on-quarter and year-on-year. We have good discipline on the cost of risk. Our cost of risk is coming down, and we will be able to give you more details about that for every portfolio, and we have a good discipline in terms of capital allocation with a growth agenda, but not linear, but it's very much focused on the segments where we want to grow more. I mean, expenses are under control. It's going towards efficiency and efficiency ratio increased and expenses under control and growing lower than the inflation with collective bargaining, IRR, and then we want to share that with our employees. In terms of messages, we have a few takeaways. We continue to work strongly to build a very sound business diversified and also resilient. We continue to transform our service model and our offering geared towards the main segments of the bank, and we will elaborate further on that. And we have a very good discipline in terms of executing our strategy. Last year, we delivered and consolidated our strategy. And so in summary, we will highlight a few points. Here, I have 4 main messages. But in summary, 2024 is when we consolidated our transformation. Well, certainly, we have to continue on this transformation path. We will do a lot more in 2025 and '26. But in '24, that's when we consolidated the design we had forecasted for the bank, and the results came along. I mean none of this here is new, but this is just an idea of how we concluded the year. First of all, we turned the offerings in our institutional positioning. Now we are signing in a different way. We just launched that with you when we had our first quarter release. So now we are starting a new campaign, a new brand positioning, which is quite robust. With that, we also launched a new offering, which is our free offering, and this has evolved consistently and quite well. A few months later, we relaunched our Select, which is high income, and we are also monitoring our brand positioning, and we do the same with small and midsized companies. We evolved in our service model a lot in the stores with SMEs. We are now serving clients by micro regions. We removed the experts for SMEs from the stores, and we cater service through the platform. So our service has evolved in a very robust way. So we hope that 2025 is the year of further consolidation. We also made advances in our investment channel. This is a strategy which I've been repeating for a few years. We are building a large investment franchise in selling third-party services of loans and also liabilities from the bank. We have a strategic convergency of a full banking offer from Santander, and Toro, our digital brokerage firm, is one of the most successful ones in the market with the best NPS score, and we will have the convergence of this offering, and we will continue to talk about that. And technology is another highlight. Chat is the major channel. It grew more than 200%, more than 2.2x in the last 2 years. The product offering is very lean. And with that, we are improving the way we deliver services to our clients. Now speaking about some strategic businesses, we selected 4 strategic businesses. The first highlight of the year in terms of individual business is our consumer finance. The market as a whole grew. And I think we grew more than the market itself and certainly much better than the market itself. Our consumer finance for auto, for vehicles is one of the most robust ones in the country. Our market share ranges between 20% and 21%, and this portfolio grew 20% in 1 year alone. But more importantly, we grew with quality. We are working with ratings of 8, 9, 10, and these are the highest ratings we've ever had. We acquired a lot of clients, and we focus on price discipline. We will soon talk about the funding rate and how that increases throughout the year. So our individuals and consumer finance is [ prefixed ]. And so with a high cost of funding, we were able to have a very good price discipline. And at the same time, we were very selective in terms of our clients. And to conclude, our consumer finance, which is the largest one in Brazil, is now 100% digital. So we deliver to dealers and end users a very seamless experience. The second highlight at the top, our SME business. I've been saying for a few years that our main mission remains even though the macro scenario is a bit more difficult, but it doesn't mean that our growth will be linear, but we will continue to grow, and we have a lot of appetite. We want to double the size of our SME business, SME portfolio. We are growing almost 2 digits, 9% year-on-year, but we are also growing in terms of our positioning, coverage ratio, and we will certainly capture a lot more synergies. Another highlight is our cards business. I mean transactionality is well represented by our cards business. I mean, we are constantly in relation with our customers. What measures a transactional relation for individuals and corporate is part of our main focus, and we evolved a lot in our credit card business. 88% of our base are made out of account holders. We are working with the holistic client and not just by area. We grew the platform 15% year-on-year and the average spending of clients that we grew that by 2 digits, which is a very sound growth. We are selling credit cards at a very good pace. We are more interested in extracting more value from the base that we already have, extracting opportunities from the base, which is better than the marginal opportunities. We are doing both, but we are trying to extract even more value than what we currently have. Now I'm talking about funding. Funding is another highlight. Looking at the consolidated year, we have the best year of our history, BRL 23 billion in funding. Our AAA, our internal channel, we have almost 2,000 advisers. Their net inflow per adviser was BRL 16 million, which compares quite well in terms of other players in the market. And our NPS stood at 82 points, quite high. Now speaking about client with primacy or principality. Well, I will give a spoiler to you now because we are just a few months from launching our major project called OneApp. Our OneApp, it's been in construction for almost 2 years. It's not a new version. In fact, it's a new app. And this new app will consolidate all of our other apps and all of the service experiences in one single place. So our current app works very well, but this will be a total new experience. I'll tell you a bit more when we have our next earnings release for the first quarter. We will focus on a small product, but this is a topic for 2025, and it will cover the entire year of 2025. But throughout the third quarter, we will have a more solid evolution. I'll tell you more about it. But in summary, this represents a big leap in our journey. We already made substantial improvements. We improved the digital experience for both corporate and individuals, but we're going to go further. We will launch a major app, and this is being built together with the Santander Group. We can give you more details during the Q&A. Speaking about customer experience, individuals and corporate hit record numbers at the end of last year, which is quite positive. Certainly, we want more. I don't think 63 should be a ceiling for corporate or 49 for individuals. But these are impressive numbers and we intend to grow even more throughout the coming years. I mean, individuals has great penetration. And for the second year in a row, we were #1 in this website that measures stability and complaints. So we are very pleased to have the best stability among all the players in the financial market in Brazil. In terms of clients, we reached about 70 million in February. We already superseded that market. But even better than the gross number, I always like to look at how many active customers we have. And last year was the year where we grew the most our number of active customers. We grew 2.2 million active customers in one single year, which results in 8% growth. And even more than funding, we were able to bring the primacy of these clients. We have principality of these clients. which is very good. But how are we doing that? We are doing a lot of things. Here, we just talked about hyperpersonalization, and I've been insisting on that topic for quite some time. I'm not going to go through every item of this slide, but we are moving forward with a new platform, totally redesigned for CRM. In fact, our CRM was everything for everyone. We would say, I mean, we cover the big massive people and the capacity to hyper-personalize was not very robust, but we started personalizing it or hyper-personalizing it back in 2022. So now we have pieces, [ photos ], offerings, prices and terms totally hyper-personalized together with open finance, and we embraced that very strongly. We were one of the banks that grew the most. We are the financial platform with more consent in the corporate segment. Therefore, open finance evolved a lot. And this, in turn, results in a huge capacity of making our clients to feel unique. To conclude, well, Gustavo will give you the numbers. So thank you for now. So Gustavo, the floor is yours.

Thank you, Mario. Good morning, everyone. I'm going to start the presentation by talking about our loan book. The evolution in the full year as well as in the quarter is the result of the disciplined search for greater profitability, as we have declared to the market for quite a few quarters now. In the individual segment, we grew by 1.5% in the quarter with emphasis on products leading to greater loyalty and transactionality, such as cards. Cards grew by 10% in Q4 and 16% in the full year. In cards, it is important to say that we had a qualitative growth. We made better use of our base, focusing on middle and high-income clients. The low-income portfolio, on the other hand, has lost share with a drop of 17 percentage points in the last 3 years. That's very important in terms of quality of the portfolio. And in addition to the quality of the portfolio, we saw greater transactionality as we're going to see momentarily. Consumer finance, as mentioned, maintained the good dynamics seen in the previous quarters, posting robust growth of 5.1% in Q4. As we said before, we're very satisfied with our credit quality. To give you some color regarding that, quality of credit, Mario mentioned, 80% of the total portfolio of consumer finance is classified with the best ratings. Ratings 8, 9, 10 account for 80% of the portfolio, representing an increase of 15 percentage points compared to December 2021. In small and medium-sized enterprises, we see an important evolution, growing 6% in the quarter, especially in this quarter in government lines. And here, we see an important and balanced combination in the segment of credit income, fees and funding. It is super balanced and super important in terms of the portfolio. We know how to work in this segment and are prepared to move forward with quality and at the right pace. We'll look at the macroeconomic environment and our performance. On the right-hand side of the slide, we see our funding. The disciplined management of funding prices has helped to improve average costs in relation to our funding stock, which goes hand-in-hand with the objective of changing the composition between wholesale and retail in our liabilities. We see that individuals are growing 2 percentage points in the last 12 months. So the evolution of the strategy is there. In addition, we optimized our funding instruments that improves costs. We issued credit notes about 20% more in terms of volume growth in the quarter with good market prices and an important demand for these securities by the market, which is very important. On the next slide, we present the performance of our revenues, which grew by 14% over the year. Net interest income, NII, continued to expand in the quarterly and annual comparison. In the last quarter, client NII performed well, both on the asset side with the prioritization of more profitable lines and segments, we've been talking about this, and on the liability side with an increase in the funding results due to the rise in interest rates. As a result, the spread increased importantly by 60 basis points. And this is not only due to the higher Selic rate, but also because of the rigor and discipline in asset pricing. Market NII saw a lower performance quarter-on-quarter, which can be attributed for the most part to a lower result of our treasury operations. Q3 was very good. Q4, a slightly lower performance quarter-on-quarter. And there was little impact of the Selic hike. And I emphasize, as we mentioned before, that we are focused on reducing sensitivity to interest rate variations in our results. Fees showed good performance, good and recurring performance throughout 2024. We recorded growth of 10% in the full year and 3.4% in the fourth quarter, which once again brought us to all-time high levels, the result of our strategy of focusing on transactional products, and this is working really well. Once again, I'd like to highlight the 13% growth in cards in Q4, 19% growth in the full year, a result well above the expansion of our client base, driven by higher spending coming from relationship, transactionality and loyalty. Loan operations and consortia showed increases in the quarter and considerable improvement in the year-on-year comparison, as you can see in the table. In insurance, we see the effects of a lower production of credit life insurance for payroll loans. That's something we showed before. It's a decision that we took aiming profitability and some reduction in renewables of insurance during the period. But insurance ended 2024 with a 15% growth. On the next slide, we are going to talk about the quality of our assets, a reflection of our well-balanced loan granting and well-adjusted portfolios. We kept loan loss provisions, LLP practically stable in the quarter. As a result, our cost of risk fell by 3.5%, a reduction of 50 basis points in 12 months, very important. Here, it's important to note that we're beginning to see potential signs of a more challenging macro environment, more court-supervised reorganizations. You have followed this in the media and the market. More court-supervised reorganizations in agro and corporate, but these are portfolios with good guarantees and better resolution expectations. With regards to delinquency, short-term and long-term indicators remained practically stable. The increase you see in short-term delinquency among corporate is attributable to a higher volume of overdue payments in the quarter. And there are some cases that are one-off and are in the process of being settled in the short term. I know you're going to ask in the Q&A. So I will talk about Resolution 4966. The capital adjustment in 2025 will be around 14 basis points. We can speak more about that. We are focused on sustainable growth and long-term growth of our portfolio. We do active risk management. We have discipline in pricing and technical rigor in resource allocation. That's why we have the results we are posting. Next, I'm going to talk about expenses. We're making progress in our cost for efficiency with an emphasis on a correct cost control, allocating expenses to be more profitable. Over the years, the growth in expenses was in line with inflation, actually a little below. In the quarter, we had an impact on personnel expenses, 4.6% increase related to the collective bargaining agreement in addition to the increase in variable pay during the period, which is important and related to our growth. As regards to administrative expenses, the increase results from the increase in marketing and data processing expenses as a result of the greater transactional activity, more business, and that is positive for our operation. Once again, expenses grew below revenues and contributed a lot to the continued operating leverage of the bank. We saw sequential improvement in the efficiency ratio with a drop of 5 percentage points in the full year. To end the results session, I bring you a slide for the full year. Mario has mentioned some of it. I'm going to detail it some. 2024 was a year of significant deliverables. The good performance reflected all of the actions we have implemented over the last 3 years. So it's a reflection of what we've been doing. We ended the year with an income of BRL 13.9 billion, up 48% year-on-year and higher profitability with ROE close to 17% and core capital of 11%. We evolved in the composition of our earnings with revenues growing well above expenses. We improved diversification of credit, we improved revenues, funding. And of course, we strengthened our whole balance sheet. Our balance sheet is more balanced and strong. Lastly, I would like to emphasize that our work is geared towards the medium and long term with the aim of guaranteeing sustainability, showing robustness and generating consistent results as we have been showing. So thank you very much. And I'll turn the floor back to Mario for his closing remarks.

Thank you, Gustavo. To end, so we can have a lot of time for questions. We have 6 main takeaways. They are basically the closing of 2024 and how we started 2025. We are already 35 days in the 2025, and we count every day. So we have 3 big messages about clients and 3 big messages about the business. Starting with the client as it should be. We're building a bank with 100% focus on a complete and principal relationship with the clients. It means I want to be able to serve my clients A to Z, not every time, but any time they need in the channel that they choose, the language they understand, the right offering for them. I want to have this full relationship, and complete relationship with them. With that, I will be able to have client primacy as we have been saying, which is we want to be the main bank in the lives of our clients. Second big takeaway. How do we do that? With growing hyper-personalization, treating each client individually as a unique person, they should feel that they are our main client. We like to talk about the bank, about ourselves. I want to talk less about the bank and talk more about the client. It's not about the bank being having principality. It is the client feeling that they have primacy with us, not the other way around. Three messages about how we're going to run the bank. Gustavo mentioned how this message has to do with 2025, 2026 and the next 15 years. We want to continue to grow. We will continue to grow with discipline in managing our profitability and portfolio. So yes, we have a growth agenda, but it's not linear, not for all segments, not for all products, not aiming to have a bank share just for the sake of it. We want to do it smartly in a very dynamic way. And the top management, all the executive committee and myself are fully dedicated to having a more clinical management of our portfolio. We have been showing this. With this, we'll have diversification in terms of revenue streams, get client primacy and proportionately increase funding and fees. And of course, credit is key. We are a bank. We know that credit is fundamental for the lives of our clients, but credit has to be the means and not the end itself. Credit is not the end itself. We have to be able to allocate our capital and credit in a smarter way. We've been doing this. We're quite satisfied with 2024. And to put it all together, we have technology. I don't have to have 1, 2, 3 slides to explain technology. Technology is embedded in everything we've said so far. In all of our messages, in all of the numbers Gustavo mentioned, there is technology. This is the big driver. It's a big differential that we'll pursue. We want to be distinctive in technology. It's not easy because the bar is always going higher and higher, but we innovate and to catch up where we need to catch up and to do more. That's my final message, starting with the client, ending with technology, the 2 main pillars. with our leadership and our people doing all that. So now we are going to start the Q&A. It's going to be a pleasure to continue to answer your questions.

[Operator Instructions] I'd like to start with a question by Bernardo Guttmann from XP Investments.

Congrats on the results. My question is about the retail segment. The bank evolved a lot its franchise, redesigned its high-income business, launching a new digital proposal in mass retail. In addition to the contribution of all this to the cost of funding, how does this benefit the bank to be more prepared to face perhaps a new credit cycle, which will be perhaps more advanced? What were the most structural adjustments made in this segment? And what can we expect in terms of credit policy? Is there any segment that should be prioritized in this context?

Excellent Bernardo. And that's a great question. We could spend the next hour speaking about that. But I'll try to be brief and Gustavo can add. Yes, we evolved a lot, and I briefly touched on that. We evolved a lot in terms of the way we are organized, and this means 2 pillars, what offerings we have for every segment and what is our model to serve. Of course, the journey is connecting all that. So last year, we delivered a lot in terms of offering and model of service. You mentioned retail. That's where we have the main transformation. We had mass retail, the new digital offering, it's the free offering, credit cards with no cost forever and many other benefits, not just that. And like I said, this has evolved quite well. We have brought in new clients and better quality clients on average compared to before. The onboarding has been very good, very assertive. We are not looking for a broad and totally open sea. We are looking for new clients in a technical and scientific way. At the end, we have practically all Brazilians that are pre-mapped. We have preapproved or 0 limits for dozens of millions of Brazilians. So we can look for new clients in a very clinical and surgical way. In high income, as you mentioned, through the year, we had some repositioning. We had started doing this in 2022, and it was good. We started growing. To give you an idea in Select, in the turn of 2021 to '22, we had about 600,000 clients. We ended last year with 2.5x this number. And this was very organic. Some targeting, but we grew a lot in high income. And now we take one more step forward, which we mentioned in January in the press. We simplified our coverage model even further. Now we have a targeting of our old high income [indiscernible], which was a nice brand, but it was just one more brand. We did a lot of analytics, and we talked a lot with the clients. We figured that we needed to simplify that even more. It was a brave move. Giving up a brand is not an obvious decision. But now we have the Santander client, mass retail, the old low middle income and the high middle income starts being Select. So that simplifies our offering. We're very excited with this new evolution. How does credit behave in face of all that? Since 2022, we have been evolving a lot our models our systems, credit journeys. That's a part which is less visible in the market. We invested a lot in redesigning our credit types and our loan granting. Of course, in 2022, we had a lot of cuts, but our discipline of looking marginal production is daily. When the macroeconomic improves, I look at it every day, I go test to see how we can feed that back. With a more challenging macroeconomic environment, we'll continue to make these decisions. Last year, before the interest rates increased a lot, the exchange rate increasing, we made important adjustments in Q3 as well as in Q4, and we didn't have the deterioration of December, which was partly reversed in January. So we have that kind of discipline. If I look at the number, we reduced our clean consumer credit in Q3, payroll loans started in Q3, became more visible in Q4. Payroll portfolio dropped quarter-on-quarter. And I've been talking about this with you. It's part of our discipline in terms of resource allocation, where I place my bets in our credit appetite. In the margin, we continue to grow our balance sheet, and we'll continue to be very selective with an additional input of a more difficult macroeconomic environment. Of course, we want to grow even more in high income. But in high income, we'll be selective as we have always been. And now with the part of our middle income having migrated millions of clients migrating to Select, we are sure that we'll be able to serve these clients even better. So I'm optimistic to be able to grow in high income because it was a good portion of clients that were well served, but now will be able to be served in a differentiated way. But in mass retail, we have an agenda of growing with a focus on profitability. It doesn't mean we're going to grow in all products and at the same pace as we had in the past few years. So the same discipline. SMEs were more impacted by the hike in Selic. But we continue to grow in SMEs. We have the appetite of doubling in size. We have almost BRL 80 billion in our portfolio. We can have BRL 150 billion in a couple of years. Client base, we can grow some more millions of clients. We get to that, but with the same discipline of looking where are the subsectors that are more challenging or work to be close to clients, we'll do restructuring. We're doing with other banks. So it's BAU, business as usual, part of our management, but we'll continue to grow SMEs. And in wholesale, we didn't ask about that. But in wholesale, for years, we've had this discipline of looking at things to see whether they make sense or not. Capital allocation continues to be a good source for large corporates. We have a GCM franchise. We love that. We make money in fees and in distribution. But in terms of our capital, we'll look at the delta, RWA that makes sense with the loans. So we'll grow marginally this quarter sincerely because of the exchange rate, not a lack of appetite. It's because it made sense to allocate capital in high income, middle income, in consumer finance. So it's a long answer because it was a broad question.

Our next question comes from Eduardo Nishio from Genial.

I have 2 questions. I mean the first question is about 2025. We start the year with a more difficult landscape, the perspective of an increase in the Selic rate. So if you could tell us a little bit about how you see 2025 in terms of the credit landscape or whether higher Selic rate impacts your market NII; in terms of fees, whether you will continue to grow double digits. And also in relation to the OneApp, if you could elaborate a bit more on that app that you were launching. Also, if you could tell us whether you already tested with a controlled audience? And what will be the launching timing and whether you will be able to also offer personalized offers?

I will start from the last one. Talking about OneApp, I mean, I just wanted to share the teaser with you. I mean we were even discussing whether we would tell you about it now or in the first quarter. But since we are beginning the 2025, we are starting this year. I know this is a teaser. We don't have a lot of information. I mean, in a way, it's on purpose because we want to elaborate more throughout the year. And so we are building it with our clients. Since 2023, we've been working on it. Just to be very precise since the third quarter of 2023. I mean it's a lot of work to build a new app because we already have an app, but we are doing that with a lot of research. We are listening to our clients and nonclients. I mean, I know that we have excellent competitors, both digital banks or incumbent banks, but we want to be at least equal or we want to be very distinctive because this is how you win the game faster. The idea is to have a conversational app, much more than what we have today. The idea is to have an app that brings this hyper-personalization in a more tangible way. We already have that in our current app. I mean, I don't know whether you're a client of us or not, but Santander clients should already see that hyper-personalization as individuals. So we're already seeing that more personalized approach. And we will increase that relationship further with OneApp. I mean this is all I can say. This is the teaser I can give you. But after the first quarter, I will be able to tell you more about it. I mean there will be more people testing and giving us feedback. This is something that will not move the needle too much in terms of our results for this year. But it is nonetheless a very important step because we moved several points ahead, and this changes the journey experience and also the relationship with the clients and transactionality. The results will come 2026 and further on. We will start with friends and family on April 1, but I'll talk about it more in the first quarter. About the perspectives for the year, I will not give you numbers because the fact that we do not give guidance. But yes, every bank is sensitive to the macroeconomic environment. I mean, I can't say, okay, it's 15 or 10 and everything will be the same. Of course, that's not the case. But we were working diligently to have some market sensitivity in the margin. Increasingly lower. I know that it's difficult for you to project things on the buy side. It's also difficult for them to understand it. But the bank has been in Brazil for 42 years, and we've always worked non-hedged, and Gustavo can tell you what that means in practical terms. This is something gradual that will not take place in 1 or 2 quarters. But I would say that in the short or mid-range, we will move towards an interest rate sensitivity that is quite different from what we had. So before this high spike, certainly, this brings some benefits. In terms of appetite, you might recall that in the third quarter, I told you during our Q&A session that we anticipated that we will grow a few percentage points less than what the market anticipated. And it was okay for me. And some people even said, well, Santander is probably less ambitious in terms of growing the portfolio, and that was maybe a negative highlight or less cautious. But in hindsight, I'm very comfortable with what I said because I think the market ended up converging to what I said, but I am the first one to raise my head. We see already signs that it didn't make sense to think about a credit portfolio 2-digit growth. But as I was saying, we continue to work hard in preparing the bank to grow because this is a growth agenda. I can't just say we will be grow the same, nothing will change, but I want to be more technical and to give you more details because I know that we have shareholders and a controlling company that is constantly demanding results from us. But I'll stop right here, and Gustavo now can add some more comments.

We had already talked to you about that in the third quarter. So in terms of market and sensitivity to interest rates in September, we started hedging of marginal projections. In terms of direction, this contemplates a gradual projection throughout the period to reduce sensitivity. So in marginal production, you do the hedging, but you still have some stock. You know that the average term of pre-fixed transactions is 18 months. So this gives you an idea of what could play ahead, but the decision has already been made regardless of the macro. This strategic decision was made in September, and we are executing to plan. This is a process. We are making progress. And again, this allows us to have more predictability, less sensitivity, but not only for 2025, but '26, '27 and '28 and so on and so forth. So this is a strategic decision that has already been made and it's just evolving. Now if you talk about the portfolios, we are prepared to grow. We want to grow. We made adjustments. We always make adjustments whenever necessary. But now it pretty much depends on demand. So what could happen to the auto market. If there is demand, we have what it takes to grow. I mean, let's say the demand is the same, but the ticket is different. So with the same funding, you probably give a downgrade to the kind of vehicle that you buy. But we are well prepared. And technically, we are well adjusted to go through 2025 that may have different characteristics. We've been prepared and we are prepared. The bank is a very large bank. So we've been prepared for quite some time. And as Mario said, from the third to fourth quarter, we made some additional cuts. We do that whenever necessary, and we make adjustments whenever we see performances that make sense in terms of profitability. So basically, this is it for 2025. There is a lot more to come. What was market volatility in December is already different. In January, there is a major difference between what happened in last December and January. The expectations changed. The curves resume to the levels of what it grew in December. Therefore, we are prepared, and we are following the strategy already agreed upon.

Now we have a question from Pedro Leduc from Itau BBA.

Congrats on the results and congratulations on the year. And my question is about NII and NIM. I mean, client NII was positive. It was not obvious if you look from the outside in terms of portfolio mix. It wasn't so obvious to explain it. I would just like to ask you to elaborate a bit more on that line and looking at 2025 and whether client NII can grow above the portfolio. I know that client NII involves a lot of things. You have the portfolio mix, volume and funding. So if you could talk about these 3 pillars, I would appreciate it.

So Pedro, I'll just start with a very brief introduction, and then I will turn the floor to Gustavo. Thank you. This is a very good question. I will link client NIM with we've talked about not only this quarter, but in the past quarters. Whenever we talk about the active management of the portfolio, when we talk about loan directioning as a means to get to transactions and our relationship with clients, when we talk about not growing linearly, but choosing products and segments. Everything has a connection with clients. And this also is connected to the overall portfolio with clients. And things are evolving quite well. We've never had such high funding. With individuals last year, we had a very positive year, and this also has some other recurring effects. When we talk about redirectioning and this fine-tuning of our portfolio, Pedro, in practical terms, we are prioritizing, I mean, always looking at our credit criteria. But at the end, we are talking about focusing on products where I can have a transactional product that gives me floating and floating obviously is also part of that client NIM commission. This is something on the side, but it does have a relationship with that strategy. And there is also a topic related to pricing discipline. And Gustavo, I'm sure, will have something to say about that. Funding costs, I mean, I think it grew 400, 500 basis points and on average over 200. But year-on-year, we managed to have a very good spread discipline. So this reshuffling of the portfolio coupled with pricing discipline and the choice of products where I can also add price and have a better cross-selling. This summarizes the strategy. And a great part of the explanation behind the numbers is this, but Gustavo can elaborate further.

Pedro, First of all, there is pricing discipline. The curves that are referenced in terms of giving prices, door-to-door grew on average 500 basis points. We produced over the year BRL 500 million in loans. If we didn't have a good pricing discipline, there will be a compression over the credit spread. And it's important to be very rigorous and to look at every portfolio and see what would be the best organization of the portfolios to extract better benefits from that credit portfolio. We do that every day, every week. We meet regularly to test elasticity and to test everything and what it takes for us to get there. Sometimes we test some things even in detriment of losing share. We do that very rigorously and with all of the details possible. I mean, to answer your questions, from that 60 basis points in delta in the quarter, maybe we could say that 60% of that comes from funding or deposits and things like that. And the remainder comes from our very rigorous discipline in credit spreads. I think this is pretty much where we wanted to go, but this is how we operated in the quarter. We will continue to pursue this discipline. What could happen maybe in the future, if future curves are lower, we have to keep our discipline to maintain the spread. But we are not going to change our dynamics because it is working. And that differential, an important part of that comes from how we extract value from credit. It's important that we are growing, not only that, but we are growing and we are expanding our credit spread.

And Pedro, to conclude, I think you also asked whether the market could expect us to grow client NIM above the portfolio. Certainly, yes. I mean, I think last quarter, there was a topic saying that the lack of indexation of the bank vis-a-vis the growth of the balance sheet. I mean it's important to grow the balance sheet. I'm not going to demonize it because we will continue to grow. We do have the necessary capital to grow, and we will invest in growth where we have to invest like clients, et cetera. But the major challenge that I put forward last year, and now this is becoming more practical. So how can I extract more value from the capital I have and from what I have. It doesn't mean that it will come from the same client, the same product. I can reshuffle things and we see that happening. So we want to de-index growth and do exactly what you said. We want to grow results more than what we have to grow balance sheet. And with that, we will increase profitability much faster when compared to what we would have done the old way. And we will do that with everything that Gustavo said, not only this year, but throughout the next coming years.

Next question is from Daniel Vaz with Safra Bank.

Congratulations on the results. I'd like to go back to a point Gustavo mentioned, hedging of the new production starting in September. when we look at the sensitivity when you have 3 shock scenarios, it looks like scenario 2 when we have an increase in the interest curve impacting your funding. When we look at the number, there is a relevant impact in the trading and banking portfolios. So would you think that the hedge for next year will help your ALM because all analysts are looking at a negative number of around BRL 2 billion. So I'd like to get your opinion about the market since we talked about clients to understand what you are expecting for 2025?

This is a very complex question, but let me try to address that. As what I said, we are in this progression of hedging. What will happen is we'll have lower exposure, less exposure, but we'll still have some exposure. On the banking side, we'll have some exposure. If the portfolio conditions are maintained, depending on how we produce the portfolio, we'll have more or less position. If we produce as we are producing. We give you an example of what happened in Q4. If we produce less in the portfolio of payroll loans, we'll have less sensitivity. because I'm originating less for something which is prefixed compared to Selic rate. So we'll continue to reduce our sensitivity with hedging for the banking book. It will depend on the composition of the portfolio in 2025 and that depends on the rigor we established and how we are going to go about this. We won't grow in a disorganized fashion all portfolios. that can imply more or less sensitivity. It's hard to say ex empty. And we have the FIS, which has a higher carry than 2024. This is a given because we have a portfolio. You know the size of the portfolio and that implied in capital effects due to marking to market. And that's the logic, but we will reduce our sensitivity. We all have our FS positioning. I cannot really give you a number because we can have positives depending on the futures curves and how they behave, they can mitigate the sensitivity effect. So what is important to you in my opinion, you can do a number of calculations. you can calculate sensitivity to interest rates and you have to see the progression of Selic rate over time. You cannot compare point against point. You have to see a progression because NIM has to do with unexpected events. So you have to think about how to do the math. But what is more important is that we will follow the script. The script will not change in 2025. We will not change our policy because 2025 is different because our policy will remain. So your question is great, but it is quite complex to address. But that's how you have to think. You can start with sensitivity. You have to look at the average of Selic rates, the trajectory of Selic, but there are variables that still have not happened. So ex [ anti ], it is very hard to do this calculation. I mean I think it's not that simple, but that's how our balance sheet behaves. Our balance sheet is quite large, so it has a progression. Putting it differently, we don't expect anything similar to the 2021 to 2022 impact, which lasted for a good part of 2023. The expected increase is relevant, but it is not compared to what happened before when we started having that Selic rate hike. But in practice, the fact that we are managing the business in a more evolved way, we will mitigate that. You will see this effect being amortized along 2025 and part of 2026. But of course, there will be some impact given the carry of our portfolio. But we are working with that, Gustavo, to have a renewal of the securities, exchanging the securities. So we have to potentially have positions that are able to be realized. In January, we had some progress. So over time, we'll be able to manage our portfolio with mitigating factors as all banks do. But this is a decision that we make in mid-Q3. We start executing in September, and that was a decision made. It's being executed, and it is independent of Selic increasing 100 points or 150 points or remaining where it is. The decision has been made and will be positive for the management of the bank and for your ability to read our earnings and be able to project over time.

Okay. Very satisfactory answer for a very complex question.

Now we have a question from Eric Ito, Bradesco BBI.

Congratulations on the results. Regarding 4699, you mentioned the expectation of impact on net shareholders' equity. So what are you sharing in terms of expectations for recurring impact in terms of provisioning, commissioning for the brokers impact on revenue? What can you share in terms of the potential impact of 4699?

Gustavo?

Well, the impact on capital, I think, is clear in 2025 and what it will be. And then we have to phase in. It depends on our capital performance and so on and so forth. But it is important that you know what is the impact for 2025. There will be a benefit of the deferral of some fees and payments. And there will be an increment of our provisions given the fact that 4966 being different, 4966 has some floors. It costs more to originate. So there will be more provisions. compared to 6682. We cannot give you numbers ex [ anti ] again, but this combination of the positives, the positive deferral and more provisions given the new rule, I believe that everything will be quite adjusted. Of course, we have to run a few months. This is a new dynamic, but we estimate that there will be a neutral impact given the adjustments for deferrals versus this new dynamic of ALL, ALL price will be different than in the past. So net, we believe that this is going to be a neutral effect.

And let me add to that. There were a lot of questions in Q3 and in our conversations that we had in between the calls. questions regarding what's going to happen to CET1, the capital base and payout, you're possibly going to be asking about that. So again, we are at about 11%. We are comfortable with that order of magnitude. So it's an order of magnitude that gives us peace of mind, and it's part of our alignment with the group. Again, we are part of a group that has a CET1 close to 13%, 12.9%. So our way of operating Santander Group zooming out now is to have adequate capital with the adequate buffers at the different affiliates but surpluses of capital at the group level, which in my point of view, makes a lot of sense because there are shareholders there that see the portfolio as a whole in euros. So we get to a level, which is super okay in our view. And talking about payout distribution, it allows us to continue to have an agenda of value with a payout level which is compatible with what we had last year. But with the bank growing over the years, we want to nominally continue to have a greater payout. The fact deferral happened, it is positive. It is positive for the industry and for us because it will allow us to have the progression we've been having with IOC, dividend payout and so on and so forth.

Now next question comes from Gustavo Schroden from Citi.

Congrats on your results. Mario just answered the question I had about a level that is lower than historical numbers. But I think it's here to stay. I just want to insist on this topic. I mean, it's lower when compared to your track record. I'm not saying that it's inadequate. It's just lower than your historical numbers. With the level of results posted by the bank, the bank at one point had, I mean, achieved 17.6% of ROE. You cover an extensive journey when you face more difficult times with an ROE of 9% and 9.5%. But this equity one close to 11%, I mean, CET1 close to 11% with the growth of NIM, efficiency also improving. Can we start working with an ROE close to 20%? Do you think that this could be a reasonable number? I'm not asking for guidance. I just want some direction. do you think that the bank could leave that number of 10% and go more towards 17%, 18%? Maybe we should look at a larger mission. And I'm talking about CET1 because that has an impact because 11% gives you more leverage, and this could also allow for higher returns. If you could elaborate a bit more on that topic, I would appreciate it.

I will start from where I finished the last question. When I refer to that 11%, which is a very comfortable level, I'm not saying that it will be 11% or 11.0% or 11%, whatever. In fact, we do not have a problem in working at a level of around 11%. I don't want to give any guidance, but just so you understand how we think. 11% or below that, I do not have to aim at 11%, 12%, just so that we will be more comfortable in terms of CET1. 11-ish, I mean, that doesn't make us uncomfortable at all. And Santander shareholders are not uncomfortable with that. I mean, how do you see our mission in terms of profitability? We continue to pursue, and I said that some quarters ago, not only in this situation, but in other interviews, we are still seeking for that level of 20%. 20% is not our final goal. I mean, we shouldn't even have a final goal. We should always pursue raising the bar. But this is a level that we should pursue, and this is part of what we do, and you have to constantly ask us about that 20% number. I don't see 20% as something that will happen in a very short period of time. But certainly, this could be like the end game in the point of view of numbers of this current cycle that I'm calling the transformation of the operation. I mean, this transformation can only be materialized in this phase, and I'm sure it will be much better when we reach that level of 20%. Yes, we will pursue 20%. I continue to believe in that number. Every quarter, we can visualize. We cannot touch it, but I can visualize what are the levers that will allow us to go there. We have to work better in terms of our cost to serve. We have to be more efficient. I mean it's nice that we are now at 38%, but 38% is obviously not the level we want to be. We have to get an additional 5 points of reduction. So we have to work diligently. This year, we have many challenges. I mean our top line growth was 14%. Our top line may not grow the same 14%, but we have to start working in grasping more things. I mean our revenue is 3x higher than expenses, higher than ALL. So we have to be very focused. And with that, we will continue to get there. We will continue to converge towards that 20%. The closer we get, of course, you have to look for more. Every 1% will raise the bar. I mean we have to look for ways to increase that further with a lot of discipline, of course, but you can be demanding of us. It is just a mix of how larger jaw can open. And so 2025, our discipline will be even greater. But the top line has to be one that we would not regret later on because we don't want it to impact our cost of risk. Basically, this is it.

We also have a question from Mario Pierry from Bank of America.

Congratulations on your results. Mario, Gustavo. I had 2 questions. I mean, they are follow-up questions. The first question, I mean, Gustavo just talked about efficiency. And when we look at it, you are increasing expenses below inflation. I just want to have a better understanding. What are the initiatives you have in the pipeline for the coming years that would allow you to grow below the inflation. Having said that, I mean, given the needs that banks have to invest in technology, et cetera, Mario, you said that you see there is additional room to improve efficiency. So I just want to understand a little bit of that.

Mario, we cannot hear you. Your sound was muted.

Okay. Here. I'm back. I'm back. So I just want to have a better understanding where that will come from. And my second question, Mario, has to do with the drop in your wholesale portfolio. Because if we exclude foreign exchange variation, I think that portfolio was 11% or 12%. That's a large number considering the interest rate landscape of 12%, 13%. I know that, that involves a little bit of allocation because you're allocating more capital to more profitable lines. But there was a very significant drop, and this is what drew my attention. I just want to understand whether you were anticipating some problems in some areas of the economy or whether you are concerned about some industry sectors and you want to reduce your presence?

Those were excellent questions. So I'll answer them in the same sequence of your questions. You asked us about our efficiency agenda and looking at the expense side. I will comment on a few topics that are not new, but it's always nice to reinstate them. I earlier said that, I mean, how do we pursue that 20%? But a very important part of that means that we want to have gains in the cost to serve. We made some progress throughout the year. We will tell you more about the metrics. But in-house, in between our earnings release calls, we talk a lot about that. The reduction in the cost to serve involves 2 things. The unit cost to serve, we have to drop that cost very quickly, especially in segments where the purchasing power is lower, that is mass retail. So the only way for us to have a more profitable segment, which is our mission, and that is not yet achieved in the mass retail. So the only way to do it is by reducing the cost to serve for clients. But there is also another agenda that involves managing nominal costs. This nominal cost has some detractors, meaning we live in a country with inflation. I mean, exchange rate has improved, okay. But the average exchange rate will be higher than that of last year. And as with any large companies, we have expenditures in euros and U.S. dollars. And we are expanding our operation in several fronts. I'm increasing our sales force with smaller companies, we call it companies one. We have my investment portfolio, which is AAA. So to combine all of these drivers that involve more expenses. Technology is one of them. We want to invest more in technology. I concluded my presentation talking about technology because technology is behind all of that and has an impact in every single number that we talk about here. So how do we manage that? We have to be very disciplined in terms of where we have to make reductions. Mario, we do the self-funding of our own growth. I will just give you some examples of what we are doing. And the most obvious example has to do with the reduction of our brick-and-mortar stores. We are doing that in a very concrete way. In the last 3 years, I think we were able to reduce our network -- physical network by 30%. And if we look at 2025, I think by the end of the year, we will have reduced our physical network by another impressive amount. Is there any magic number? No, there is no magic number. But we want to, I mean, reduce that by like 1,000 stores. This is like the brick-and-mortar stores. We will get there. And in the meantime, we continue to challenge ourselves to arrive at an ideal number, not a number itself, but we want to have a number of stores that will just serve our clients the way they want it. I mean clients are less demanding in terms of going to the brick-and-mortar stores. We will have less stores, but smaller journeys will demand a lower number of calls. We will seek efficiencies coming from our remote channels. Our major sales channel is remote. We renamed it now, and it's called Pulse. We have 10,000 people there in the remote channel. I'm not saying that we will cut that number to 5,000 out of 10,000, but we want to serve our clients better through that digital journey. That's why the digital first is important. We see the need of having a lower number of brick-and-mortar stores, and we want to increase the efficiency of our remote channels. A third path for efficiency is pricing journey. Once I reduce by almost 40%, the total number of products I have in my inventory by 3 years, that's something relevant. I said before that we have more than 300 cards, and we will end with 10, 12 cards in our offering. That's because we have some co-branding, some corporate cards. So the simplification of cards also is a sign that we are simplifying the journey to our clients. They understand what we're selling better. We can simplify the offering into a very few products rather than hundreds of products and the processing track is lighter and cheaper, and it's much simpler to serve these clients in the after-sale channel. Certainly, we want to invest more in technology, more investments in new systems and in cloud, I mentioned OneApp that entitles a large investment, but we have to see where the funding will come so that the nominal cost should evolve as minimal as possible. The conceptual challenges, I mean, I don't have to evolve that BRL 25 billion, that's a ballpark figure of our expenses. large companies. Yes, large companies was also part of the question. I mean, talking about one-on-one management to portfolio management, large corporates. There is a concern. No. Of course, we will monitor the corporate segment as a whole and look at the evolution of Selic, corporate, almost 100% of large corporate, they fund themselves with post fixed rates, and this increases the marginal cost of funding of the companies, and we look at that very closely. The same way we did in the past. But now the bias is that we look at who is more leveraged if there is something to be done. And when there is a union, we are trying to talk to unions and have a more organized conversation with companies. The capital markets is still a major source, but a company that is high in debt, they will probably try to get new debentures or CRA in the market. But this exchange variation doesn't have anything to do with this marginal issue or Selic, et cetera. But I have to be more rigorous in terms of where I will allocate my capital. We have finite chips in terms of capital, CapEx, technology investments, people, why not. And all of these chips have to be allocated in a very disciplined and technical way. Wholesale is a good business, certainly, that's where I came from. But given the fixed income capital, we have a very strong [ DCM ]. Given the strength of the capital markets, particularly the domestic one, we compete with different scale. So every large transaction, be it those that go to the market that I can put it in-house or bilateral ones, we try to see whether that loan pays off, both in terms of the profitability and the cross-selling that comes with it. In fact, maybe I would say I would rather get the distribution fee, well, but the portfolio will go down. Okay, but I look at the relationship as a whole. I look at the ROE of the relationship and I look at the ROE of the whole business. Our wholesale ROE is very good. And I don't want to compromise the ROE just because I just want to show you that I am growing the wholesale portfolio for the sake of growing. I mean, last year, I decided to grow 20% of the consumer finance portfolio with a very good ROE, which is helping us to recover. So this discipline of allocating this finite chips with no restriction, neither capital or macro, but I have to see where I will allocate it and whatever it makes sense for us to allocate in the wholesale, we will do it. And we are growing exposure.

Now we have Thiago Batista with UBS.

Congratulations on the results, very consistent results. I have one question about the private payroll loan on this new version, this new model that is being discussed. How do you see the potential for this market? I know it needs some regulation. We haven't got details about the rules, but what the potential issues you see in this model? I know I'm only allowed one question, but I have a follow-up question regarding margin. You spoke about it. Gustavo mentioned that about 60% of the client NIM expansion was due to funding spread. So in funding, funding was almost flat quarter-on-quarter. I think it increased 0.2%, 0.3% and the portfolio grew 3% in the quarter or close to 3%. So I want to understand this loan to total funding ratio, 93% to 96%, was this a onetime off in the quarter? This is a trend? And would this explain the 60% by NIM? And I'm sorry, I asked 2 questions, but one was a follow-up.

Do you want to start with the follow-up of the margin, I think it's worth detailing that.

All right, NIM, there are 2 different blocks of growth in funding. One is the higher Selic. That's number one. And number 2, the composition of funding is different. If we have a composition with more demand deposits, more retail, retail, the delta will appear. We have been talking a lot about this in our strategy. Our strategy is based on individuals and legal entities, the transactionality, transactional deposits. This combination gives rise to a delta plus the Selic. So that was in Q4 and dynamic. Our goal is to continue with this dynamic. Our dynamic is to continue to expand individual segment, quickly expand transactionality so that we have more and more deltas compared to the overall cost of funding and share of that in client NIM. If Brazil has liquidity, if individuals have liquidity and we get more transactionality, this trajectory will persist. And this is how we are working. We are less concerned about growing volume. We are more focused on quality of volume. As you saw, we increased the credit notes in the quarter because we have fewer credit notes, there was a market demand. The credit NII for these issuances were really good, given the demand. This is an instrument that has no reserve requirement. And in the composition of the whole liability and funding, it makes sense. And that's what we are looking at. We can grow. It might be a little flat. But overall, it needs to be positive from the standpoint of NII. And that's how we will go about in the next quarters based on transactionality and relationship between individuals and legal entities. I'll speak briefly about the payroll loans. In a nutshell, there's a big potential to give you some big numbers. Private payroll loans in the whole market accounts for about BRL 40 billion, BRL 670 billion, which is the size of payroll loans in the market. So INSS, public payroll loans have much bigger numbers. Of the BRL 40 billion, we have 30%. So we and another player have basically 2/3 of the market, given our presence in payroll, which is a big part of the franchise and will continue to be. So it's BRL 12 billion. In our BRL 71 billion payroll loan portfolio, it's a small part. We like it. And we have been entertaining more of that given the caps and so on and so forth. It has a gigantic potential. So my view is with this new E config as the government is calling it, has the potential of unlocking a huge volume and value. It is a concession, but it is a better concession with better guarantees when we link the payroll loan, we separated from the payroll itself. Of course, the employer remains an important element. But that loss of credit, which increases a lot when a client leaves one job and moves to another job. We've had low PLL, but PLL will increase for us and for the whole market when the client leaves an employer. The cost of risk tends to be reduced. Competitiveness will increase, but it will increase in a much bigger pie. In the meeting with the government last week, and this was very much talked about in the media, we said and I said that I imagine 4 or 5x the current size was not an exaggerated estimate. It will not happen in December, but it will happen in the next couple of years. You asked about challenges. There are a number of challenges regarding systems connections. There is a centralization in the government systems because that's where we have the information of E-social, but it's a direction that makes sense. We at Santander embrace this. I believe that FEBRABAN, the Federation of banks embraces this. This is an evolution for the market. It's not a marginal product. It's a product we are going to be talking a lot about in the coming years. It's very positive that the government is addressing that. The government is calling private and state-owned banks to embrace this. So we're very optimistic about the e-consignado.

We will now move to the last question. We have Yuri Fernandes of JPMorgan.

Congratulations not only on the earnings, but also on the deliverables and client primacy. There is a lot of speech about this, but we are looking at all metrics. Most of my questions have been asked and answered. I'd like to explore quality of portfolio. We have seen more concern. There's food inflation. People are getting a little worried about what could happen in terms of delinquency default over 2025. Of course, there is a lag. Things are not immediate, but I would like to hear your take on this. Also your individuals number. Normally, we have [ 15 ] to 90 days overdue tends to improve. And I think that it increased marginally 10 basis points. But I would like to understand if this slight worsening in 15 to 90 days is a onetime off? Or is it a trend of worsening?

Yuri. I'll be very brief, and then I'll turn the floor to Gustavo. Thank you for participating. The last but not the least important question. You always have good questions. So some questions ago, I mentioned that this debate, I'm immune or I'm not immune. It is impossible to say that a bank operating with capital and with loans is immune. Even those that do not operate with credit are not immune to the macroeconomic environment. And there are points of sensitivity in the whole balance sheet associated to the macroeconomic environment. It's a good thing we know about this. We acknowledge that it's BAU, business as usual in managing a bank. But the fact that the macroeconomic scenario is more difficult and more challenging, that makes us adopt more measures rather than fewer measures. So to say that we were going to grant loans the same way that we did 6 months ago, well, it's not going to be the same. But we have been preparing the bank, and we talked about this in Q3. I said we should grow some percentage points less than what we predicted as an industry. I said that in the Q&A. And then all of the other peers are reviewing and suggesting that they are going to grow less. There's a suggestion of growing the portfolio as a whole in high single digits. I think that this is going to be revisited along the year. Again, we'll try to bring results without needing to grow the balance sheet a lot. But marginal grant loans is not going to be the same if the macroeconomic is not the same. So we're going to be more constructive with the macroeconomic environment, which is more challenging. Gustavo, perhaps you can mention where you're focusing on individuals that have less to do with the rate itself. but they have to do more with inflation, with food inflation, with disposable income, which is very relevant. And for legal entities, that's a hybrid of the 2.

Yuri, let me stress what I mentioned before. We are very comfortable with the performance of our portfolio. And we have been adjusting the portfolios on a weekly basis when needed. So regarding the 15- to 90-day past due, we did adjustments in September. In the last months, of the quarter in some clusters, and I'm talking about individuals here. We saw a performance which was not adequate. So all of the adjustments have been made. Now looking forward, which is not in [ 15 ] to 90 days, if we see some detachment, and it can happen. It's way too early. The inflation effect is not 100% felt, but we'll follow the same routine we followed in recent years, particularly in the last 4 months of 2024. I'm not so worried about 15- to 90-day past due. This can be a reflection of adjustments already made. And we have to see how the population will perform. So nothing changes in terms of the dynamics. And that's why I affirm and I state again that we have peace of mind with our individuals portfolio and consumer finance that can be more susceptible to a different scenario in 2025.

So the adjustments have been made. We made adjustments in the last 4 months. If necessary, we'll make more adjustments and always with the same discipline. This variation in 15 to 90 days past due does not worry me, but we have to look at the performance in 2025. And the same applies to legal entities. They have a different sensitivity. inflation does count, but there is more effect of the interest rates. And just last week, we made a lot of adjustments. It's BAU. And Gustavo mentioned the weekly review. It applies to legal entities as well. And whenever we need to do so, we'll cut loans, although we want to double our business in legal entities. But this cannot be a decision that I execute in a linear fashion every day without looking at what's happening in the macro environment. Gustavo mentioned agribusiness. We're going to have a better agribusiness here, but it will not be as good as it was until 2023. You know that our agribusiness portfolio last year kind of stayed stable, having doubled in 2023. So we'll look at the portfolio and the margins, and we'll share this with you, we can speak more about that in the upcoming Q&As. Will it be the same as it was 6 months ago? No. We believe that we have to have a well-balanced portfolio to feel less any deterioration of the macroeconomic environment. Any adjustments in marginal loan granting, that's a daily decision. And we'll make these decisions as we have done from September to December of last year. We have marginal cuts and if needed, we'll continue to do so with a view of optimizing what we have in our portfolio, almost BRL 700 billion in the expanded portfolio, and we'll continue deriving value from the existing portfolio, and we'll continue to grow the margin.

With that, we end the Q&A session. I would like to thank you all for joining us this morning. And immediately after this video conference, myself and the entire Santander Brasil Investor Relations team will be available to answer any questions you might have. Thank you very much. Have a great day, and I'll see you next time. Thank you very much. [Statements in English on this transcript were spoken by an interpreter present on the live call.]