Itaúsa S.A. ($ITSA4)

Good morning, everyone. Welcome to another addition of Results in Focus. I'm Priscila Grecco and I'm the CFO of Itausa. And it's a pleasure to be with you to present our results of 2025. Share the business perspective for '26 and, of course, answering your questions. To run this live along with me on my side. We have Alfredo Setubal, CEO and Investor Relations Director of Itausa. Welcome Alfredo.

Good morning Priscila, good morning to our shareholders, our investors. We are delighted to have you. We're going to have a great event. We have good news, good results and let's move forward.

Before we start to go through the agenda of the event, we have simultaneous translation into English. If you need just click in the platform, the English channel. And you can and you should take part of our event submitting your questions, comments or suggestions. Please click on the box of messages in the platform on YouTube via comment and X using the hashtag #ResultadosItausa. And from this addition, we are transmitting this event through LinkedIn and you can also submit the questions via the comment. Now let's see the agenda. So we're going to start by the traditional unlock of Alfredo by the business environment of Alfredo. Seen the perspective of 2026. We're going to go through the results of Itausa in our portfolio of 2025. Liquidity management, we are going to talk about this, and we're going to talk about covenants or this is awaited. And then we're going to talk about the Q&A session. So once again, you start. As usual, we have our talk, and we want to get your two cents on the business environment 2025 is a very challenging year with high interest rates. How is the scenario impacted our portfolio? What can we have as an outlook for 2026?

Well, yes, Priscila. Last year, we didn't have a big expectation on the performance of the economy, the international factors that affect [indiscernible] scenario is confirmed. We have an increase throughout the year of the interest rates. We have the economic growth of Brazil that is smaller. We had an external very difficult start abroad internationally. In general, our scenario was relatively favorable. It's a good performance bank with the risk, very good delinquency controlled. The portfolio of credit is growing. The bank has done fairly well. The company's, in general, are growing above what is expected. And all of this stems from cautious difficult scenarios and challenging scenarios through the last years that we've done. We have built a resilient portfolio for scenarios that are more difficult. These are companies that are facing -- there are for utilities, infrastructure, natural gas. So we have a portfolio that has fed off very well through the challenges. We are very optimistic so that this year, we can continue to have this good performance due to the solidity of the portfolio regardless of being in a challenging environment. Interest rate is high, economy should grow very little. We have an international scenario that is confusing to wars taking place elections in October in Brazil, that is a component of uncertainty will win. What is the policy adopted? It's an environment that remains cautious for our portfolios and our investments.

Very well. Let's see how this scenario that Alfredo has narrated has reflected in our results. We had a year of record results. It reflected the capacity of creating value. in the macroeconomic context that is very challenging, showing the resilience and the quality of our portfolio. So we reported the recurrent net revenue of BRL 16.5 billion, a growth of 11% in regards to the previous years, which has the return over the net assets with a growth of 1 percentage point in regards to 2024. Our net debt redoing 67% in the period, getting BRL 2.3 billion. The last -- the lowest threshold in the last 3 years our net assets, a slight reduction due to the proceeds that we declared during the FY. Market value of Itausa getting [ BRL 260 ] billion. Valuation of 68% in regards to the last year been much higher than the Ibovespa index, which has a performance of 54%. And in the same way, the market value of our portfolio with a valuation that is 66% in the period, getting to BRL 210 billion also much higher than Ibovespa index. How is this reflected in the valuation of our share? Well, we see through several periods, different time periods, our share performing much higher than the market benchmarks. 10 years, it's valuating 474% in comparison to 271% of Ibovespa. This differentiated performance is repeated in a very consistent way. In the short term, and midterm. I think it's a differentiated performance with another component for the creation of value for our shareholders. Even with this, there is still a lot of upside for the shareholder to capture the market value of our portfolio BRL 207 billion. Out of those BRL 193 billion is referring to our participation at Itau Unibanco and our portfolio of the nonfinancial sector getting BRL 213 billion in the market value. And let's remember, we have nonlisted assets still being considered with the books. Aegea and Copa Energia which leads us to the market value of BRL 160 billion, it leads us to a discount on the share of the holding of 22.6%. You followed recently an increase of capital this year in March, still with [ IGM ], which leads us to having a new fair value for this company. And we also did an update on the fair value of our portfolio, incrementing the fair value in BRL 3.2 billion, reflecting the new realities of values for this asset. This leads our value portfolio getting to BRL 210 billion and it generates an increment of our discount of 1.2 percentage points and the discount is almost 24%. So from this date onwards, we're using a new fair value of Aegea to show you and to the follow-up, of how our discount is evolving. After we had a good reduction of discount in this year. It was 4 percentage points since the beginning of the year of reduction. But still, there is a threshold that is very high. considering what is justifiable. Cost of holding still very high threshold.

Certainly, Priscila The discount is reducing. We had a discount in the last month of '25, 25%. Now with a comparable base of 21%, 21.5% looking at the ports of the last year -- of the last days. As I showed, if you place the share of our Aegea in the same valuation of the last subscription of the shareholders of the company, this discount goes back to 23%, 24%. We've read the research of the analysts showing this exaggeration. This discount tends to once again going to 21% taking into consideration a new valuation of Aegea in our portfolio. Added to that, the discount is being reduced by the higher conviction of the shareholders and analysts that our fiscal efficiency will be reduced over the last 2 years. Over the next years. And as we're going to have a tax expense that is lower than BRL 850 million per year which is a lot due to the end of the PIS and COFINS tax that we pay because of the interest of our capital that we receive our -- from our invested companies. I think our public will understand this number better. All of that has taken to a discount much lower. And I believe that there will be the discount there will be reduced as the value that is hidden, so to speak, in our portfolio such as [ IHH ] will appear that Itausa has been capable of doing good investments with high returns, much some even higher than Itau Unibanco.

Well, let's remember that in this market value, we still consider the Copa Energia, the book value. And we know that since the investment it has -- the reference of value has changed. We still understand that the implicit discount in our share is much higher than what we are showing. So the market should be following up. There are important assets that should lead to the reduction in the discount over the next few months and years. Let's go over our next issue, which are the results. Let's give a panorama of how it was the performance of our invested companies, starting by Itau Unibanco. We had the results that were very solid, very robust of the portfolio of credit, delinquency under control and efficiency levels that are ever better, reporting the net income of IFRS of BRL 45.4 billion, 10% growth in regards to the [indiscernible] in an ROE 21.8 Dexco has an important performance of growth in the segment of the performance of the education of cellulose soluble and still with difficulties in the finishing sector and ceramics. Reported EBITDA growth of 19%, getting to BRL 1.9 billion. Net income, BRL 46 million, a drop of the previous years because of the factors that I commented. But also as a reflection of higher financial expenses and also lesser impact for the revaluation of the biologic acid. Alpargatas a very positive year for Alpargatas after the turnaround process. The growth of volume with an improvement of margins and better mix of products, geographies and also an improvement of the business, international business. That has led the company to do a report of results EBITDA of BRL 866 million, a growth of very expressive in regards to the previous years and the net recurring income which is net recurring revenue, BRL 611 million. The growth in the results is due to the demand growth in all the models that the company operates and also growth via readjustments of tariffs and also a reflection of better operational efficiency and a reflection of all the work of optimization of portfolio that the company has done over the last few years. Reporting an EBITDA of BRL 10.2 billion and net income recurring [ BRL 2.2 billion ] Motiva. Copa Energia, a positive year. Growth in volumes in the business that the company operates and also an impact in the higher spreads of the business. So the EBITDA, BRL 1.3 billion growth of double digits net income getting to BRL 705 million in the period. And yes, also with the growth of results with a reflection of the IGPM contracts getting into the EBITDA of BRL 7.2 billion net revenue of BRL 3.6 billion. And IFS has concluded the results, we are presenting the numbers accumulated until 9 months, growing numbers, the economies and reflecting the tariff adjustments and new concepts that cut into the period, even though there is a reflection of higher financial expenses. The company still has [indiscernible] growth in its revenue of 18%, getting to BRL 1.7 billion. Alfredo [indiscernible] overview, I think it was a positive year with the growing results. Showing resilience in a scenario -- macroeconomic scenario that is challenging.

Yes. These are strong results. Our main asset, which is Itau Unibanco has performed very good in terms of results in terms of growth. In a competitive environment with the incumbent and the fintechs that are growing and occupying their space in the financial sector, but the bank has had the capacity to deliver results to deliver products, technologies, new technologies to the product. No highlights, not to take too much time of our shareholders and investors. Well, first, Alpargatas. I think that Alpargatas, we had in 2022 difficult years. The company lost market share, operational issues and the results were negative. Well, we had good results. And over the last years '24 had a recovery in '25. We see solid results for the company. recovering its rhythm of growth, the market traction, the recovery in the international market, Rates, which is the subsidiary of Alpargatas in the United States, the production of shoes, also a growth of sales, opening new stores, generating cash.

So Alpargatas they paid proceeds.

Yes. Last year, they proposed a capital reduction of Alpargatas BRL 350 million. That was distributed to our investors. Alpargatas has recovered its normal natural rhythm of growth. [indiscernible], strong in Brazil and abroad, it's moving along. The negative highlight is Dexco still facing many difficulties in the ceramic parts. The wooden panels doing well. [indiscernible] is recovering, metals and in the ceramics once again, we have had difficulties in the ceramic tiles that we have a competitive market, a lot of offering. Reduced margins. Our expectation for 2025 was that 2025 is the bottom of the performance of the ceramics and we should from this year onwards have a recovery. But we've seen in the results, the results are very, very small with the cost of capital and the minimum return. So we're addressing some we're selling some assets to reduce the high leverage of the standard of our companies [indiscernible] about that. We want to reduce that to 2.5 to 2.7, selling some assets of Dexco is getting into a scenario that is better from this year onwards.

Okay. Let's go to the composition of the net income. We closed the year with BRL 16.5 billion with the recurrent and we didn't have recurring events in the period and a great deal of our results comes from the investor companies, Itau Unibanco, the biggest contributor for this result, a growth of 10%. But here is worth highlighting that our portfolio nonfinancial has contributed with over BRL 1 billion for our results. Another point to highlight is that this contribution has grown through the year 42%, so it's a rhythm that is much more faster than Itau Unibanco, which is obviously more mature asset. An important highlight in regards to the growth in the performance that is stronger in the nonfinancial. We have a worsening in this period. with the higher expenses, tax expenses. The financial result is stable for the period. We're going to talk about that and [ ICS ] is an accounting reflection in the period and no big highlight. So the contribution of our invested companies, BRL 17.5 billion it was the contribution and the financial sector BRL 16.700 billion, and the nonfinancial with a contribution of BRL 1.1 billion, a growth of 41% with a highlight for Copa Energia and Aegea. But all are bringing contributions that are important for the period which is important. The other ones are an accounting amortization that were allocated at the acquisition, but it's an accounting effect. Now going to the results there was a worsening of 21%. Here essentially because of the higher tax expenses, we had the receiving of the higher interest rates of our Itau Unibanco so we have an impact of higher expenses of higher expenses of PIS and COFINS. In the year, the expenses paid by Itausa, BRL 600 million of PIS and COFINS, and we pay via the [indiscernible] holding another BRL 250 million of PIS and COFINS taxes totaling BRL 850 million of expenses that Alfredo commented at the beginning of the presentation. This is the last year of PIS/COFINS. So this is the last year that we should have an impact of that expense, which is very expressive of our cost of holding. That's why we expect that during this discount, this will have a last tax expense that will be very representative next year. Another important highlight, our administrative expenses has grown year-on-year. It was stable, even with an inflation above 24%, above 4% and with the impact with the payroll and now we have had a reflection of efficiency programs that we implemented in the company, and we could have delivery of administrative expenses of flex year-on-year, which is another important highlight should do. So let's talk about the financial results. Our financial result is stable even with the Selic rate growing and impacting the expenses with the debentures. Now as a reflection of all the liability management that we've done over the last years, and we've done in this year, no comment about where we did the payment of refinancing, we saw our interest expenses dropping in the year. Our profitability in cash flow increasing because of the higher silicate and this was compensated with higher fees when we prepay anticipatedly the debentures. This is a specific fee that will compensate for the reduction of expenses of interest rates but with a positive scenario that generates and brings positive perspectives for the year for the reduction of the interest rate expenses because of all the initiatives that we are implementing. So this is a positive scenario. Now the next topic, which is liquidity management. Let's remember a series of initiatives that we've implemented since 2022. Let's remember that 2022 is when we got to the highest debt threshold in an a half of gross add after the acquisition of the old CCR, which is Motiva. We did the prepayment, improving our debt profile and since 2022, we reduced our net debt in 62% because we have a net debt of BRL 3.2 billion. Our net debt has reduced 94% since 2022, at the threshold of BRL 0.3 billion. And also as a reflection, we've had the service of debt and payment of interest rates in this period. We have a level of coverage of interest rates, very healthy. Due to the proceeds and also profile of that, which is about 7.1. And it's important that we increased the average deadline of our debt in 3 years. And at the same time, we had a reduction of the average cost of our debt. Now at the threshold of spread of 1%, which is the threshold that is very healthy. We don't have any amortization, which gives us a lot of turn quality. I'm going to show you the agenda and the rating agencies that evaluate our risk contribute to give the [indiscernible] rating for the quality of risk of Itausa. Going to our amortization schedule, the refinancing and the prepayment of debt that occurred in 2025. This has led us to a schedule of amortization that is very healthy. As I told you, without any payment until 2028, we removed the concentration of amortization that we had in '29, [ 3031 ]. increased the amortization on the long term, leaving this profile for the schedule of amortization much more aligned with the cash generation expectation of the sector non-finance of the portfolio as a whole. And here, all the leverage indicators and the profile of debt very healthy, reflecting the solidity and of our threshold. So we've done an important reduction of debt, and this has given us a very positive liquidity position of balance as well.

Certainly. Priscila, we've done a correct reading of the scenario at the end of '22 when we did our last investment acquiring shares of Motiva. And I believe that what is the scenario that we are going to have. Well, it's a scenario that is less growth, higher interest rate, with more difficulties of finding good options of investments for the portfolio from the moment onwards with this scenario that we pinpointed at that time, we have the process of reduction of the debt and increasing the debt. It was the characterization. We reduced substantially the debt reduction that is very significant. We continue to analyze investments. We haven't seen anything in this period of investments that would justify the capital allocation in new companies. Taking into consideration that the interest rate, the level of return that is expected that we justify the investment of Itausa. We didn't find anything that we're justified taking the risk with the default scenario. We did well the strategy worked. In this period, we saw the companies that we invested consolidating in terms of results strategies, growing the companies of infrastructure buying other concessions and other companies. So we could grow our subsidiaries and this with a lot of surety, governance, control of risk. I believe that it was a journey of consolidation of the portfolio that we started in 2017, that was very good, very safe. And the companies are growing the participation of the nonfinancial companies in the portfolio, showing a certain relevance. Itau Unibanco is so big and our participation is so high, and it's very difficult with the performance that the bank has with this portfolio, to have a diversification that is very relevant in our whole. Nonetheless, it shows results that are solid, a [indiscernible] of almost 10% of the result. The company is paying proceeds that's helping our expenses. And I believe then this is a great moment. 2026 is still challenging but the portfolio in a way that it's assembled, is very resilient for difficult environments. And we will benefit in a favorable environment of dropping interest rates and an economy that is more dynamic. I think we did well. You highlighted an important point. We controlled the operational expenses of Itausa practically no growth of expenses. Several contracts with providers, technology services. So we kept the expenses of the holding under control. and that's important. It's important that we do this to show that we do in management that is very diligent of the expenses of the holding. The rating speaks for themselves. All the companies of rating are giving us AAA. This is reflected in the possibility we issued the diventures of 10 years, which is very, very rare at very convenient rates. We did 0.6% above CDI with a 10-year and it shows the trust of the market [indiscernible] of Itausa, it shows the capacity of Itausa of seeing difficult scenarios.

Now I want to talk about proceeds. It's awaited by the audience. We've had a very positive year for the payment of proceeds. [ BRL 11 ] billion, over EUR 11.8 billion, the highest threshold of payments 24% of the increase in regards to the previous year. This led us to a payout of 76% and a dividend yield of 14.7%. This, if we just consider that the part of the dividends are anticipated, the dividend yield would be 9.5%, lots of assets. And the third highest dividend yield in the B3 in the period. We had movements of payments. Since 2025, we've done payouts in -- to our shareholders. And we've done over the last year, with the attributed cost of BRL 11.3 per share, and it helps the shareholder to capture a tax benefit when they do this investment. Positive news, and we should highlight the growth that we've had of the proceeds in the nonfinancial sector. We've seen over the last years an expressive growth that is very much aligned to what Alfredo said, growing performance more of the financial portfolio. We've had a threshold of BRL 1.2 billion in proceeds and 50% in the average of growth year-on-year, and this has a positive perspective. Remember that these proceeds, we've retained them in the company. facing the cost of holding and administrative and the service of debt and tax expenses, but it shows a perspective that is very positive. Next year, we're going to have the reduction of the tax expenses. That is very relevant, BRL 850 million less. So it's a positive perspective.

And we're going to be able to pay that. The Itausa expenses and tax expense. And we are going to have this per year, which next year, we -- we're not going to have any more. This makes us feel at ease because as you've seen on the screen, the amortization of our debt, we're discussing about these values of BRL 250 million of amortization of the debt per year. So that gives us a lot of turn quality that we can possibly wouldn't need to do any capital facing the amortization of this debt, just the cash flow of the company. This is enough for this amortization. And if the interest rates drop, then we're going to have some resources. These resources can be invested in new investments if the context is favorable or we can distribute to our shareholders an additional dividends. We distributed usually what we receive from Itau Unibanco so we've got depending on the context, we can do additional dividend distribution from the dividends that we received from Itau Unibanco. We are well positioned in terms of results. In terms of cash flow reduction of tax expenses due to the approved tax reform that was approved. So a positive moment.

Very good. And yesterday, there is a new -- some news, the approval by the Board of the anticipated statement for the FY of '26 of the interest of our capital, our own capital of BRL 1.1 billion in net revenue the shareholders that will have right, they have a position at the March 19 this year, and the payment will be defined, but it will occur until August 31. So another positive news. Before we talk about the closing arguments, Itausa publishes didn't use on the holding of our portfolio in the newsletter and the social networks. Please enroll in our LinkedIn channel and our -- you can see our newsletter at Itausa and also at the end of this transmission, please see our satisfaction questionnaire. So we can continue to improve this event every addition. Just capture this QR code or click on the button below the transmission screen. What we showed a good result, Panorama. Remuneration that is growing, very attractive performance of action that is overcoming the benchmarks, and it was very positive. Where we had recognition, several ones of the practice of governance, sustainability, transparency and people management. We had [ GPW ] recognizing our practice of people management, we continue to participate through several years through the main sustainability indices recognizing our practices of governance and transparency through the consecutive years, we are at the Dow Jones the sustainability of governance index. We were recognized by the relationship with the investors -- the Investor Day, our transparency. And the Board was recognized and awarded by [indiscernible] the old institutional investor, it's an award that fills us with pride. And Alfredo, positive year in regards to results and also recognition, in a year that we complete 50 years of trajectory. So very important for us.

Certainly, it was a very special year of our holding at B3. Itausa has a very solid, very beautiful governance in terms of investments. And it was -- it's been a journey that reflects all the importance for the market for the transparency in events such as this, we are showing our performance, our values, what guides the day of the company governance, sustainability, efficacy transparency. We try to be sincere with our comments. But the good things and the bad things with such a diversified portfolio. It's a year that is good. A lot of celebrations and a lot of recognition. So certainly, it's reason of pride and joy for all of us have worked with Itausa, the controlling families, this story of success. Remember, Priscila we have 930,000 natural individuals that are part of the shareholders in all the regions and practically all the cities of Brazil have a shareholder of Itausa. And this being a recognition, it brings more responsibility because we are influencing the lives directly of over 1 million people that trust our strategy trust our values. This is very nice and it brings that additional responsibility of allocating the capital of the shareholders in a responsible way without losing [indiscernible] in the responsibility of the Itausa, the size of Itausa. To sustainability, environment, education and several aspects that our companies, our foundations and institute work throughout Brazil. It's a very nice year. We have a lot of challenges and opportunities.

Well, Alfredo, it's about time that we are going through the Q&A. And I wanted to give the floor, so you can do the final considerations.

I wanted you to close the event. Well we've gone through several themes. The most important is to highlight our turn quality of doing investments or not. We've had -- we are a private equity company and investment fund, we were mandated to do investments. We have the freedom to do it and we've done this with a lot of success over the last 8 years. We did an investment program that is very solid with a resilient focus, we've performed our shares above the benchmark of the capital markets and the financial benchmarks. We see the results of 10 years, and we overcome even the CDI index, which is a difficult one to beat because the real interest rate of [indiscernible] very high. Well, we've performed well. We had good performance. We still have hidden book assets in our portfolio, which the companies will be listed so increasing the proceeds. So we're going to have a portfolio that is very robust. There is a portfolio that with our Itau, it's about BRL 20 billion in Brazil in our portfolio that's higher than most companies that are listed in the stock exchange even though it's small in the portfolio of Itausa, it's very relevant when we see what the companies are in the portfolio as a whole. And we see that Itausa takes part on the Brazilian economy in a very interesting way through leading companies that have very well-known brands from the public. So this gives us a lot of energy so we can continue the work. It was a good year even though we had the internal difficulties, we are well positioned. We are very good. And now we're going to answer the questions of our investors and shareholders.

Alfredo, it's time to answer the doubts of our guests. Let's start with this block with the questions of the market and analysts that we have invited. You can ask your questions live in our event. Meanwhile, you can ask your question using the message box of the platform via YouTube, by LinkedIn or through the comments or using X via the #ResultadosItausa. So take part. Our next invitee that will take part with us is Daniel Vaz from Safra.

Thank you for the opportunity of taking part in this panel. Well, when you talk about [indiscernible]. Recently, we talked about the magnitude of value because of the data valuation in the IPO. Aegea has taken concrete steps in the direction of the IPO. We saw the conversion of registry at CVM, the hiring of this possibility of offering, but the expectation of the first quarter of '26 with this volatility it seems that it close the window through a determined time. So we need to know how you and the group of controlling shareholders were thinking about this offering and the timing? The intention is to be ready as a window opens. Second question follow-up. Do you convert the preferential shares that you have in an IPO in the ones that are right to vote and...

Well, Daniel certainly, Aegea is scheduling to do an IPO. This first window, as you stated, it was more difficult due to the war and all the impacts that has brought to the market. But it's a window that the company itself wouldn't be able to exercise as we're still closing the balance sheet and they haven't done their quarterly review. Well, this IPO should occur at the end of May, beginning of June, there might be a favorable moment. and using the information that is available from the first quarter of the company. So our project IPO for Aegea still ongoing being worked at all speed the banks are hired. We have done the sounding in road shows in Brazil and [indiscernible] with potential investors. And during this IPO, it will be an IPO. Then maybe one of the biggest ones that we've seen the company is big. It needs a capital structure that is more comfortable to face new investments, new opportunities that it has at the same time, deleveraging the results and it's [indiscernible]. So we continue with the project IPO. In [indiscernible], well, I don't see the conversion. Might be possible that at this moment, the company itself will reduce it that and all of that eventually, there might be repurchasing of the PM shares, which is capital, but at the same time, it can be considered debt but still is very premature to discuss. What are the impacts of Itausa with this IPO. The probable impact is that it will unlock more value of our investment. It has been very profitable. A part of that has been unlocked with the capital of the shareholders. It showed a valuation that is much higher than the one that we got in with the capital of with the capital of the company 5 years ago, and the IPO will show an unlocking of this investment, showing that this was a positive investment for Itausa. The company has a lot of potential growth. We will continue to be shareholders of Aegea. Seeing there's potential of growth that it has in Brazil with new bids and all that.

Well, our next guest is Yuri Fernandes from JPMorgan.

Well, I wanted to go back to the point of Aegea. We need to see the IPO of Aegea to see the cost of market or the increase of capital could lead to rebranding of these assets. It's at the book value. So could there be an unlocking of value or well, given that the increase of capital should be -- was on the value of the book. So that's the first question. And the question about the discount and a tax reform. I wanted you to reinforce this message? How much do you believe that there should be a discount of this tax expenses should make the investors realize that from '27 a great deal of the discount should stop existing. So once again, to reinforce this message for the story?

Well, thank you Yuri. And about Aegea since we had significant influence in the company, we account this investment via [indiscernible] equivalent. So it's not allowed that we will evaluate this asset, and we bring it to fair value to our books. So accounting-wise, even after IPO, and after this increase of capital against the value, we cannot bring all the investment to fair value. So accounting, nothing changes. But of course, we start as Alfredo said, we are going to unlock value. We start to consider the new reference value for the calculation of the discount. So we start to have a vision that is clearer from the market of the real value of the asset. What was the return that we've obtained with this investment. Regards to this, we're going to have more clarity about the created value with the investment that we've done. And in regards to the discount, that I can comment. We've seen the movement since last year when we closed the year with a threshold of 25% even higher. We closed the discount that was reduced at the beginning of the year, already getting to because of the old methodology and 21%. And we realize that with the entry of a lot of foreigners with the base of shareholders of Itausa we realize the market being assimilated and trying to capture this lack of efficiency. Of course, the discount is very high. We've done a great initiative with the reference of investors. There is a schedule that we're going to be very -- the foreign investors, they don't know the tax reality of Brazil. They don't have a lot of details of our tax reform. So we are going to see this more active with the foreign investors. And the perspective is that with the -- as time goes by, as we see the fiscal efficiency improving, the market will see this in our shares. This is what I wanted to say. Next, we have Eduardo Nishio from [indiscernible].

I want you to do a follow-up on the discount. If you can tell us in your opinion, what would be the fair discount of the holding in regards to the sum of the parts, the vision of the management. We can close those triggers has increased its discount 2.6% as Alfredo has mentioned in a comparable basis, this is 21% the discount. If it was Aegea and I want you to confirm if we price the PMs of Aegea, the discount in our vision, would it be 23% above -- a little bit above 23%. So there is a discount that is higher. And in this part of discounts, Priscila mentioned the unlocking of value that you are expecting besides the potential of IPO of Aegea, do you see other interesting triggers such as what you did with Aegea and relevance of Copa Energia in your portfolio, of course, do you see any similar movements to this?

Thank you, Nishio. Well, let's comment. The calculation of the discount. We see important triggers. The end of the fiscal inefficiency, we -- there is the IPO of Aegea. And it will be clear the issue of value with this investment. I think that we can have the realization of our portfolio. And I think that, that is an important trigger over the last years -- over the next years for the discount, reducing the capture of the value created of this investment. And another trigger that is important that we clearly showed is evolution of the proceeds of the nonfinancial sector. Last year, we had a receiving BRL 1.1 billion of these proceeds. We are still keeping these proceeds in the company facing the cost of holding. But as Alfredo said, we have a perspective that is very positive of this proceeds growing more because of the solidity and resilience of our portfolio. Consequently, our cost of holding will be reduced with the end of inefficiency in such a way that maybe at some point, we can over, we can pass on part of these proceeds to our shareholders. The market tends to price this with our share. Of course, this depends on the scenario, the opportunities but it's an opportunity to be considered. Fair value vision. When we do the calculation, what would be justifiable and considering the end of the fiscal inefficiency from next year onwards, we get to a discount of 3 percentage points. Of course, we don't see throughout the world, holdings operating with a level of discount that is so low. We don't see that Itausa will have such a significant reduction to the point that it will represent just the present value in our cost of holding which will be essentially the administrative costs that we have. And part of the service of the debt that is left in the balance. So yes, we understand that there is a perspective of reducing because of all the triggers that we see to unlock value of our shares, but not to the point to get into the justifiable 3 percentage points by the cost of Itausa.

This is a technical justification. And in Brazil, there is holding, but there are others that are discounted. Well, it also is a specific holding because 90% of our investment is Itau Unibanco so I wouldn't justify higher discounts in our vision. The other investments that we've done are very good with interest rates that are very high, some even higher than the return rate of Itau Unibanco and we see that this is because of the reasons of tax inefficiency, the proceeds that are received by the nonfinancial companies are growing and higher thresholds, we understand that this discount is much higher than what it should be. It's up to the market to do the justification. I think that where we have unlocking Nishio is Copa Energia. We do not see Copa Energia is generating a lot of cash. It has an EBITDA below 1% indebtness. So we do not see at this moment no such thing that could do a marking of the investment above the book value but the company is very stable, very resilient in terms of revenue which generates an EBITDA annual of BRL 1.1 billion, we can use a multiple that is not very high, and you will see that in a simple math, the value that we have there that can be unlocked is very relevant.

Complement of the [indiscernible] of Aegea. We have the value in -- that we updated. We consider the update just for the [indiscernible]. This was the difference of the price in this capitalization of the [ PNs ] are still with the accounting value in such a way that we have a delta with the participation of Aegea via [indiscernible]. Here, the next invite, which is Tiago Binsfeld of Goldman Sachs. You can ask your questions.

I wanted to know about the administrative expenses. As you move along to the end of the tax inefficiencies, the expenses will be the main financial factor for the justifying the discount. Looking at the performance of this line we have disability in 2025. So I wanted to understand what kind of efficiency do you still seek internally on what is the best way of thinking about the administrative expenses of the holding? Or do you think that there are more efficiencies to capture internally?

We've done a very important work optimizing big contracts of the company in consulting and technology over the last years. And we managed to do an important reduction of the administrative expenses. We kept the year without a lot of growth in the expenses. We've reduced the reduction. We did a reduction of expenses in terms of contracts that is very adequate for the reality, the context and the challenges of the company. And we see how the expenses are evolving. It's in a more organized standard and inflation, and we are always paying attention to the opportunities of looking for efficiencies. We have a journey of investments in artificial intelligence that might bring some important results over the next years, but for this FY we see the expenses increasing in line with inflation because of the investments that we've done in technology. And the next guest, Eric Ito, Bradesco BBI. Eric, welcome.

I have 2 quick follow-ups. You commented with the response of [indiscernible] also the comment a follow-up of the portfolio turnover and maybe selling the assets, you're talking about [ DexCom ]. But think about we've heard some potential conversations about NTS. What can you share turnover? And the follow-up is, what would you do with the allocation of this money that could come which increased the participation? Or would it be really just an extraordinary dividend? Second question, the dividend of the nonfinancial can increase the participation in this year. What can we think about unlocking the value increasing the dividend. Because of the participation of the nonfinancial. Where can you give us in terms of timing in regards to this?

Thank you, Eric. I think that there is a portfolio. We've done a portfolio management of the participations that we have. I think that part of this investment that we've done that we've generated reduction potential reduction of our tax expenses of the end of the PIS/COFINS. We have the cash that can be used to be amortizing the investment and to increase the dividend the proceeds that we pay above what we receive with Itau Unibanco. So from next year onwards, I think it's possible to have an increase of dividends above what we pay for the bank when we receive of the bank and possibly one of the usage of the excess of capital and cash that we have. We've increased our participation -- we've increased the participation with Aegea. We have this increase with the increase of participation, there might be an increase of participation in other companies in the portfolio. But at this time, we have we are more cautious. Let's see what's up ahead but I think it's possible depending on of having more -- more investment capabilities. The increase of investments on the proceeds for the next year.

Next guest, [ Lorenzo Giglio ] of Santander.

Mine is more of a follow-up. Well, you did a great liability management, we want to know if this is over, there might be an efficiency refinancing with a prepayment or did you get to this point of the capital. Have you got to this optimal point of capital are you going to focus this extraordinary dividend as Alfredo said, or giving the macroeconomic scenario will you just have the money in the cash? Well, I wanted to get the macro scenario and we want to understand this scenario.

In terms of liability management, and I think that at this moment, we are very comfortable with the average deadline that we have and the average cost that we have. We do not see the movements that we do. They are justified with the higher debt, even paying the premium for the [indiscernible], it wouldn't justify to increase the deadline with a higher deadline and the lower cost. At this moment, we don't see that the cost of debt, taking into consideration the inventories that are in the market. We don't see a gain that justifies paying a premium for the investors, repurchasing this debt and buy any of debt. In thesis, we have this movement that is practically closed at this moment of liability management. Another question, I forgot.

When you see the uncertainties if you can give us a good overview?

I say that there is nothing too different from what is from the market, we work with an interest rate reduction through this year depending on the continuity of the war in the Middle East and the impact on the inflation. Eventually, this movement will be smaller than what is expected at the beginning of the year but we see a scenario that is better of the hypothesis because the average interest rate of Selic in this year is about the same as last year. We started last year with an interest rate growing and it's stable. We see interest rates very similar. And from [ Zenon ], we're going to depend on the economic scenario, the result of the elections, the impacts of the geopolitics. There are many uncertainties to do specific affirmations in regards to the scenario of the interest rates. Brazil is at a reasonable position in regards to other movements, we can have important impacts and the idea is to continue with this threshold of economic growth of about 2% is not brilliant, but it's possible that it's kept. In this scenario that everything works out in terms of international geopolitics, economic scenario in Brazil and political scenario, there is clear -- we can continue to have a growth that is higher in the 3% range through the next years. But at this moment, it's better to work with interest rate 26% still had a threshold of 25% on average and low growth. This is a scenario that we are working and for us, it's not a bad scenario for our portfolio. is a scenario that allows for growth of the companies, and it allows for control of cost of credit of the bank that is very good. And we see a positive scenario for this portfolio, even not being a brilliant scenario, if we consider the potential of the Brazilian economy.

Alfredo, we have another guest. Pedro Baptista, Jefferies. The floor is yours.

Just a follow-up on the capital allocation theme, with the lower interest rates, leverage concluded the end of the fiscal year [ efficiency ] and the increase of dividends in Itau. The return of 6%. So is there a difference of the dividends with the buyback? The expectation is to keep a strategy for the next years.

Thank you, Pedro. It's -- we are very disciplined in the capital allocation. We are still studying -- the teams of M&A are studying alternatives through these years, but we have this contract of higher interest rates and high interest rates because of the public debt. We didn't do any investment in these years. And we opted for the reduction of the debt of the holding, and it was the correct decision. New investments are possible in lower interest rates, real interest rates. A scenario that we have a higher growth of the Brazilian economy with more robust threshold. So as we say, we are not a company of private equity. We don't have the obligation of investing, and we don't have a deadline for this investment. So we're going to continue to look at opportunities. It's possible that we're going to have more opportunities in a more benign scenario and we will study and finance this investment. Whether if it's by cash generation that will increase with the end of the tax efficiency or if the market is open, we can go back to leveraging the company and increasing the process distribution, but this is very premature. It's very difficult to see how the scenario is going to be for next year. What are the opportunities of investment. And this investment itself, we can disinvest totally or partially and our invested in one of our investment companies. We can, as I commented, grow the participation in some of the investments that we've done with Aegea, we've done an additional investment. And I think that the idea is the increase of the investment in the portfolio, taking into consideration the cost of opportunity and the allocation of capital in -- and the bonus, our cost of capital is 14%. There is another risk and these are numbers that you have to look with a lot of ease. And it may have to make sense for our investors.

Alfredo, I think that we've seen our invite all the questions of our invited guest. We have some questions of the audience. I'm going to select a few. The main theme is proceeds. We had a participation of [ Jean Desando, Caseta Baris, Bernardes Pao ] asking the policy of the distribution of dividends for Itausa will be kept for 26. Is there any provision for increasing the proceeds? And is there an impossible change given the taxation of the interest of the of the proceeds?

Well, we're going to continue to distribute the dividends that we receive from Itau Unibanco. In a growth manner, just considering the interest and the tax over the interest of the capital. So this will be the biggest distribution and they are taxed in the other one from 15% to 17.5%. So we're going to continue with this practice of distributing the gross dividends that we received from Itau Unibanco. The additional dividends this year is not likely because we have the tax cost of the holding and as a policy, that would be it. At the end of the year, we'll see Itau Unibanco will distribute dividends, additional dividends as we've done over the last years distributing what we call the capital access [indiscernible] has with our management. And if we have, we will have additional dividends, and Itausa will distribute additional dividends as well. Proceeds, well, these will be distributed by Itausa be a way of dividend. It can be in repurchasing of shares. It can be by a capital reduction and that wouldn't have the taxation. This is a theme that we will analyze up ahead due to the real understanding over the changes that happened with the tax reform and the new law of dividends. For the way that these proceeds that will be distributed we will discuss them more towards the end of this year. But I don't know if we're going to do, and it's a discussion and it's about tax doubt is if we're going to do the incorporation of the capital -- the reserves with the payout. There is some doubt if that distribution of payout would be taxed also with 2% or not. So for that, we will have to have a better understanding of the lawyers, the jurisprudence and the understanding of the tax authority to see if that's within that additional [indiscernible] of 10%. So the incorporation of reserves is something that we will also analyze in the context of the understanding of the new law that taxes, the income of above BRL 50,000.

So repurchasing your shares, there is a question of [ Carlos Eduardo ] [indiscernible] about the perspective of new subscription of shares, calling capital.

Well, over the last 2 years, we had 2 capital calls to help with the decrease -- the reduction of the indebtedness, the policy of reducing the indebtness with the tax reform and the end of the fiscal efficiency, that will generate Itausa BRL 450 million per year of excess cash flow. This excess cash flow is enough to face the current schedule that Priscila showed in one of the slides of the amortization of the interest rates of our debt. So taking that into consideration, I think it's very unlikely that we're going to have the need to do that we're going to have to call capital over the next years. But if necessary, we will do so. But I think it's very unlikely. A lot of the shareholders love it because we do -- we did these capital calls in recent years in a private way given discount to purchasing shares, and we had over 90% of the shareholders repurchasing or purchasing shares and the distribution, but it's not a scenario that is probable for the next years that we need -- that we have a need to do an increase of the capital in the holding.

Well, Alfredo, we also had several questions about discount. Santiago Santos wanted to understand about the increase of the results of Itausa that are expected with the tax reform. We've discussed our tax expenses were BRL 850 million and if we continue that this expense will be kept with the PIS and COFINS next year, having the end of this fiscal inefficiency, we should see an increase in the same proportion of our results. Here is a liability management question, Marcelo is asking other holdings decided to close their leverage. Is it the case of Itausa?

They went to zero, the leverage. It's not our exact objective to zero in leverage because I agree that a few holdings and we agree in the general thesis that holdings per pure cannot be have a high level of leverage. So we have half of indebtedness. We reduced to 3 billion and we understand that if the position is favorable, we can go back to BRL 8 billion because we have a flow of resources, proceeds that are received that is very solid, very resilient and it stem from Itau Unibanco and now 2 nonfinancial companies. We have the practice of distributing the dividend proceeds received by Itau Unibanco, and we retain the proceeds of the company's that are nonfinance. With the proceeds growing in the end of the tax reform, we generate a capacity of releveraging the holding if we have good opportunities. And if leverage is a good path to do an indebtedness with Itausa. Last but not least, we can do a deleverage calling capital as we've done in 2 opportunities over the last years. So I think it's possible that we will releverage if we have good opportunities if the flow is not enough, then we can call capital giving this discount with the subscription and so on. So I think differently from other holdings, we have proceeded a flow of proceeds that are recurring that is very solid that we trust that they will continue to be received by the holding. So it's a position that is very comfortable in regards to our cash flow and how can we use this cash flow to [indiscernible] the debt.

Well, questions about Alpargatas. [Foreign Language] They want to know what are the plans of Itausa for Alpargatas. Are we continuing to take part in the capital or doing a sale or even increasing the participation?

Well, we had a difficult moment at Alpargatas we commented over the last years. Management standpoint, we had a few problems. We've had good results in '26. Our expectation is that the company generates a high cash flow this year. in the national market and the international market. Last year, the company reduced the capital distributing proceeds of BRL 250 million for the shareholders and Itausa received about 1/3 of that value. But once again, we're very trusting in the performance of the company. Our investments at rates, which at the beginning was negative, and we did a write-off of part of this investment now the company has generated cash flow, has grown, has opened in stores. So we see the performance of Alpargatas in a positive way for the next years. And we are sure that we normal went back to the usual performance of the company we've purchased something at the stock exchange. There is a limit that the new legislation of the Brazilian FCC open over the next month. We've done specific buying of shares, there is still some to execute on this new limit over the next months. So we've executed with a lot of carefulness and within prices that we consider reasonable. This increase in need participation of Alpargatas within this new limit. It's not very big, and we've increased our participation in the capital of the company.

So a question about Itau, [indiscernible]. They wanted to know how Itau seeds the evolution of the market with the digital banks and how Itau will be competitive in this scenario?

The bank had some time 10, 8 years ago that we suffered with the sudden growth, so to speak, of the fintechs. And many that occupy the market, they wanted to get the clients. I think they return the game around with enormous investment in technology. Just so you know, those of you that follow it out now Itau has in Brazil, 85,000 employees and out of those 18,000 are connected to the technology area. And with this big investment, we've recovered, we've worked with the apps. We transferred our legacy systems to the cloud with more ease of creating the products and apps -- so we -- over the next 5, 7 years, we come with a journey of reduction of the technological gap in regards to the [indiscernible] index. I think that the results have shown that. And I think that this investment in technology will still be kept for some reasonable time in such a way that we can continue to be competitive with these new banks these new fintechs. The banks have had besides the growth of investment in technology. A strong use of artificial intelligence necessarily relevant. We've used it in credit, a great deal of our models of service are based on models that we will evidently improve with the use of artificial intelligence, there is an important project of efficiency and reduction of costs through artificial intelligence through a better activity and the apps. So we see the bank very competitive with this new scenario of competition of the entry of our clients. So we removed a big gap in regards to these fintechs all throughout these next 4, 5 years, there's still gaps of course. It's very difficult to manage all of them because Itau is a multiple bank, we are leaders of all the segments where we work with so our demand of technology is much higher than the fintechs that work with specific niches. But I see the bank very well positioned. Itau is a winner in this scenario of the competition between the new banks, and we are very well positioned, and this is one of the big characteristics of Itau Unibanco. We have to be -- we have to know how to be present and not be fearful of facing the challenges of the technology. The bank has an enormous capacity with its culture and the group of executives to face the challenges. We are not fearful of the new technologies. We are always an early adopter of the technologies. So the bank for us is still a great investment very well positioned. And we will continue from the standpoint of our portfolio. This will be the big lever for the portfolio of Itau.

To finish, there are many, many questions, but we already went over time. Perspectives for 2026. So [ Daniel Silva, Materis Duran, Chaman Indes ], ask what is the focus of management in 2026 and the business perspective of growth for the company for '26, '27?

I think we discussed this a lot. We got the strategy right '27 with the first investment of [ ATS ] in '22, when we did the last one, and CCR, it was a cycle of investment that was very well received. We found good opportunities. We've grown a very resilient portfolio, the leaders in the sector brands resilience, and we went through this recent cycle fared very well with this cycle. Over the last years, we ever -- we didn't stop to look at other opportunities. But with the risk of Brazil, high interest rates. We didn't find anything that is interesting the future cycles. It remains to be seen how the economy will how the policy in Brazil will do, how the geopolitics will fare, the war tensions in many places that is reflected in the Brazilian economy so we're ready for a new investment cycle for some of the investments that we've done that are more mature to do investments in other sectors and companies and this will depend on the opportunities that will arise. We're very much deleverage. We can leverage once again if we have good opportunities. But as I told you, we're not a company of private equity that will have the obligation of investing in its capital and the shareholders in new opportunities. We don't have the obligation, neither of investment or disinvestment. I think that the investments are still good and they're safe the companies are growing Okay. Not necessarily. We will disinvest. And we can leverage once again with the virtual cycle if the international conditions will generate this opportunity. So let's see the scenario. We do good analysis of the scenario -- we've read the internal and external context so let's try and bring these investments in a safe way to generate value. And whatever we have, we're going to distribute to the shareholders.

Nobody will complain. Well, for it, I think that we've asked a question. We answered all most questions. If your question hasn't been answered, you can get in contact with our team. And through our social networks or just send an e-mail to our team. I want to know your opinion on [indiscernible]. So capture the QR code or click in a button below the transmission window, so you can have access to the satisfaction question there. Thank you, Alfredo, for your participation. I think it was great as a contribution. And I think it was a nice conversation with a lot of participation and interaction with our public.

Yes, Priscila. Thank you for commanding our -- once again, our event. I would like to invite all of you for August. August is almost there. Let's see how we're doing in terms of scenario, international scenarios, local, we're going to have a better overview of the year, how our companies are performing. I'm very optimistic that with this portfolio, once again, we're going to have growing results and performance of our share that is very favorable for our investors.

Thank you. Thank you to all of you that followed us and see you on the next Result in Focus. Thank you. [Statements in English on this transcript were spoken by an interpreter present on the live call.]