Banco Santander Brasil SA (BSBR) 2011 Q4 法說會逐字稿

Good afternoon and thank you for waiting. Welcome to the Conference Call to Discuss Banco Santander Brasil SA's Results of the Fourth Quarter of 2011.

Present here are Mr. Marcial Portela, CEO, Mr. Carlos Galan, Vice President, Executive Officer, CFO, Oscar Rodrigues Herrero, Vice President, Executive Officer, CRO, and Mr. Luis Felipe Tauney, Head of Investor Relations. The live webcast of this call is available at Banco Santander's investor relations site, www.santander.com.br/ri, where the presentation is available for download.

(Operator Instructions)

Before proceeding, we wish to clarify that forward-looking statements may be made during the conference call relating to the business outlook of Banco Santander, operating in financial projections and targets based on the beliefs and assumptions of the executive board as well as information currently available. Such forward-looking statements are not a guarantee of performance. They involve risks, uncertainties, and assumptions as they refer to future events and hence depend on circumstances that may or may not occur.

Investors must be aware that general economic conditions, industry conditions, and other optional factors may affect the future performance of Banco Santander and may cause actual results to substantially differ from those in the forward-looking statements. We would now like to pass the word over to Mr. Marcial Portela, CEO. Mr. Marcial Portela, you may proceed.

Okay. Good morning. My name is Marcial Portela and let us proceed directly to the presentation of the final quarter of the year 2011. On the first slide, we highlight four bullet points. In terms of business, the loan portfolio grew at a rate of about 21% in the year. And we closed - we made a closing of the insurance underwriting unit sale for a total of BRL2.7 billion in October.

In terms of infrastructure, we opened 154 branches in year 2011 and 61 branches on the fourth quarter. We intend to open about 100 or 120 branches per year in 2012 and 2013. We increased the number of employees in about a little less than 2,000 - 1,800, reflecting the commercial activities that were increasing in the last months. In terms of non-performing loans, they grew at a lower pace in the second half of 2011 and we keep sound balance sheet and a very well capitalized bank.

In terms of results, we made BRL7.8 billion in the full year. That is plus 5% year over year. And the net profit was flat in the quarter with [BRL1.8 billion]. Going to the macroeconomic scenario, I would say that our business is based on a strong macroeconomic scenario of growth. We estimate a real GDP growth of 3% for the end of 2011 and increasing towards 3.5% in 2012 and close to 4.5% on 2013. The Central Bank to continues on an easing cycle, reducing the Selic rate to 11% plan on the year end. In January, the Selic was once again cut to 10.5%.

Inflation ended the year in the target ceiling of 6.5% and should end 2012 at about 5.5%, and in 2013 should converge to the center of the inflation target, reaching 4.5%. Despite the fold in the exchange rate in October, it November it rose again, ending the year at BRL1.88 per dollar. The gradual normalization of the market should lead the exchange to - the exchange rate to BRL1.8 in late 2012 and 2013.

So we are, as you know, a universal bank, focused in retailing. We have an increasingly strong presence in Brazil. The commercial bank is responsible for 87% of total revenues. Considering assets, we are in top three largest private banks in Brazil and we have 19 million account holders, 2,355 branches, 1,420 branch - small branches, and 18,419 ATMs. Our work force is about 54,000 employees.

And we continue to be focused on our goals. We have a strategy focused on six pillars. Firstly, we wish to improve the quality in customer services. With this, we will intensify customer relationship and aim to be the bank of choice of our customers by the end of 2013. We will also identify and take advantage of cross-sell opportunities and punch the key segments and products. And moreover, we will work the brand attractiveness. But in this expansion - business expansion process, we will maintain our prudent risk approach and management, which is a competitive global advantage of Santander Group.

In October last year, the sale of the insurance company was completed in the amount of BRL2.7 billion. The gain from the sale was used to strengthen our balance sheet. We have a commercial agreement with Zurich in which the bank will distributed the insurance products to our branch network. The operation aims to foster and strengthen the activities of Banco Santander in the bank assurance distribution, providing a greater range of products and covering classes of customers not currently exploited.

The loan portfolio growth punched the results with an increase of 21% on the year. If we consider - if we consider the concept of expanded portfolio, annual growth was also 21%. Small and medium business enterprises segment had the most significant growth of close to 26% in 12 months. Another highlight was the segment of individuals which evolved 24%. In the quarter, the total portfolio grew 5%. Once again, the segment of SMEs was a highlight which has an accelerated pace of growth from 6% in September to 8.5% in December 2011.

The Brazilian GAAP, that is perhaps useful for you, is very similar so that the loan portfolio grew 19% in 12 months and 4% in the last three months. The concept of expanded portfolio grew 21% in 12 months and 4.5% in the quarter. Highlight for consumer finance, which presents significant acceleration in annual growth rate from 9% in 2010 to 19.5% in 2011. This allowed us to increase our market share substantially in the second quarter of the year. Highlights also include SMEs with 25% growth in 12 months and we can also observe the consistency of the annual growth of the SME segment as well as individuals, which grew 19% in 12 months.

In term of loans by products, mortgage was the fastest growth, with 35% in 12 months, where individuals - the side of individuals grew 50% and corporates grew 17%. Another highlight was credit cards for individuals with a growth of 32% in 12 months and 14% in the quarter. Cars grew 14% and payroll 10% in 12 months. Total funding, including funding from customers and mutual funds - asset under management - totaled BRL293 billion December 2011, up 8% in 12 months and stable in the quarter.

During the period, the highlights were time deposits, an increase of 22% in 12 months and 11% in the quarter. Total funding from customers totaled BRL180 billion in December 2011, an increase of 13% in 12 months and 1% in the last three months. The growth in 12 months is the result, partly, of an important funding instrument, the Letras Financeiras. It's an instrument that provides more stability to the funding since the minimum period of maturity is two years.

As already shown, Santander Brasil in 2011, had a net profit of BRL7,755 million. It's an increase of 5% compared to the year of 2010. In terms of profit before taxes, the result was BRL10,556 million with an increase of 8.6% and so year - the final quarter of year 2010 to the final quarter year 2011, the result was a little below 1%. In terms of the last quarters, the result was 9% - the fourth quarter against the third quarter of 2011. But in terms of net profit, the result was flat because the tax rate was increased in the last quarter of the year.

Total revenues reached BRL36.4 billion in 2011, up 11% compared to 2010. The variation in three months was 3%. Net interest income grew 13% in the year. Net fees grew only 7.4% and 1% quarter on quarter. This makes a total of 12% that I'm going to refer to in - on the next slide. The net interest margin increased by 17% in 12 months, fourth quarter against fourth quarter, and 10% in the quarter.

The net interest margin associated with customer activities - this is loans plus deposits - grew faster than the growth of the total net interest margin in 12 months. The non-interest bearing liabilities and others on the net interest margin that is not associated with customer activity remains stable, growing 1% in 12 months.

Net fees in 2011 grew 7.4% in 12 months. Highlight for credit and debit cards, which grew 34%, and insurance and capitalization, which grew 29%, both in 12 months. The variation in costs can be explained mainly by the growth of the acquiring business. With respect to general expenses, including depreciation and amortization, they increased by 9% in the quarter and 11% in the last 12 months.

Excluding depreciation and amortization, the growth was lower, 9% in three months and 10% in 12 months. The growth of expenses in the quarter is explained by the strengthening in commercial activities, opening of 154 branches during the year that were all included as opened in the last quarter, increasing infrastructure and the collective bargaining agreements - [the June] agreement.

The allowance for loan losses already including total revenue from recovery, totaled BRL9.4 billion - almost BRL9.4 billion in 2011, up 7% compared to 2010. In the quarter, the expense of allowance for loan losses, net of recovery, declined by 14%.

We will elaborate further on this. Despite the significant increase in the loan portfolio, the NPLs were kept under control and stable. In the IFRS criteria, remained stable at 6.7%. For individuals, there was a little increase of ten basis points and corporates remained flat at 4.7%. The coverage ratio on December 2011 reached 86%, remaining at comfortable levels.

In Brazilian GAAP, so that you can better compare with our competitors, the total delinquency rate over 90 days and over 60 days increased 20 basis points. The coverage rate dropped four percentage points, reaching 137% in the fourth quarter and also remaining at comfortable levels.

Regarding the key performance indicators, the efficiency ratio improved by 20 basis points - sorry, it's almost flat. The recurrence ratio decreased by 1.5 percentage points. Profitability measured by return on equity fell by 0.7 percentage points and the - our BIS ratio remains comfortable at the level of close to 20%. At the Banco Central do Brasil methodology, the BIS ratio is close to 25%, exactly 24.8%, considering the goodwill. In other words, we are still the best capitalized bank in the country, which gives us a great competitive advantage in the medium and long term.

In September, we published, at the Investor Day in London, our commitment of growth in the medium term. We also communicated our estimates to annual growth compound rate for 2012 and 2013. All those plans presented at the Investor Day leads to the following financial targets or 2012 and 2013. Growth between 14% to 16% in revenues. Costs are expected to grow within an 11% to 13% rate. We forecast credit will grow in the rate of 15% to 17% in the period and we foresee, as a result, a net profit growth of approximately 15% in the two years - in the two years to come.

So I would close this short presentation to open the Q&A with some final remarks. This is - we grew the loan portfolio at a rate of 21%, a bit above the market. We had the closing of the insurance underwriting unit sale for BRL2.7 billion. In infrastructure, we are following our trend. This year we open some more branches than we are going to open in the years to come. This is, in the years to come, about 100 or 120 per year. We increased the amount of employees in the last quarter to a number of 108,000 employees. And in terms of results, we made BRL7.8 billion full year. This is 5% plus, year over year.

And in November, the S&P raised the rating on foreign currency, long term, of Santander Brasil from BBB- to BBB. In addition, other agencies, Fitch and Moody's, also raised the same rating in 2011. Upgrades received left us with a maximum rating given to Brazilian institutions. Thank you very much and we are open now to your questions.

Thank you. (Operator Instructions). Your first question comes from Regina Sanchez with Itau.

Hello, guys? Are you hearing me?

Hello. Yes, Regina, hello.

Hi, Carlos. My question is - I know that you already provided guidance for 2012 during the Santander Day last year. But I was wondering if there will be any change on the goodwill amortization in this next two years. Is there an expectation of accelerating this amortization expenses, I mean, because maybe if you're expecting growing more lower, you could match that with the business plan. I mean, is there anything that you could share with us regarding that? Thank you.

Thank you, Regina. Carlos is going to answer your question.

Yes, Regina. Well, as you can see in 2011, basically, the amount of amortization was in line with 2010. So yes, and we are analyzing the possibility to increase and to increase the pace in our decision for this year. If we decided to do that, we will be implemented in the first quarter and in that quarter we'll be describing the amount - the amount that we expect for the entire 2012.

Okay. Thank you. And my second question is regarding the strengthening of the balance sheet in the fact that you make provision for labor litigations, the [ops] fact, the gain with the sales, the insurance, and pension business. Do you expect to cover that to make maybe lower provisioning for labor contingencies going forward. I mean, this initiative of really negotiate with the people that already have this labor claims outstanding. And if you expect to have a better figures or, I mean, lower provision expenses regarding labor contingencies going forward. Thank you.

Your next question comes from [Carlos Losedo] with Goldman Sachs.

Regina, thank you. I'm going to answer your question. Can you hear us? Regina? Okay. Very good. So about your question on the provision we made after the sale of the insurance underwriting unit. We made a provision of BRL640 million and we intend to accelerate the agreements so that we can diminish strongly the stock of labor litigation we have, so that this year we are making - we started, actually, in the last quarter of 2011.

We are going to increase the speed at which we finish this labor litigation processes and we should have, at the end of this year, a much less amount of money to be expend in terms of labor litigation for the years to come. It should have substantial decrease compared to this year. Thank you.

This is Carlos. Can you hear me?

Yes.

Yes, sorry. I just don't want the operator to cut me off since she announced me earlier. Thank you for the opportunity to ask questions, gentlemen. Good morning. Good afternoon here in Brazil. I have two questions. First, if you could comment - Carlos Losedo from Goldman Sachs.

First, if you comment on margins and net interest income. You had a fairly strong growth in net interest income in the fourth quarter. If you could give us some more color with respect to that, given the lower level of interest rates in the economy and what you expect you will see in terms of net interest margins in early 2012.

And the second one is related to the tax rate. The effective tax rate for the quarter, at least in Brazilian GAAP, excluding amortization, was much higher than we had seen over the last three or four quarters. I was wondering if this is permanent. If you expect to see an effective tax rate in the 15% to 20% level or should we - is it going to revert back to the 9%, 10% level where it was before? Thanks.

Yes, Carlos, thank you for your questions. Regarding the first question you asked - and I do remember we share with you the guidance for the entire 2012. More or less, we expect the NII increasing by 14%, 15% by the entire 2012. Basically, you see that fourth quarter NII performance, basically, is helped by three elements. The first one is that the grade growth. We have increased, in the average amount of the grade in an important way in the fourth quarter.

The second one is that the spreads, they have been - they remain very resilient and, as you can see in the quarter, we improved by ten basis points.

And the third one is that, well, part of the financial contribution in NII helped in the fourth quarter, basically because here we are incorporating the financial results from the insurance company itself and the cash proceeds that we received from that transaction. So basically, the idea that we have for an entire 2012 is more in line with the - more or less, the performance that we saw in 4Q. And as I was saying, in a range between 14%, 15%.

You see, for instance, the performance in the [type] 2011. Basically, you can see that there are two different views, one view coming from the NII - coming from the clients - basically related to the grade and basically it has performed in line with the grade growth, more or less growing around the 20%. And the other part of the NII, which is more financial and that you see in the trend year is - was lower than the entire 2010. So we've seen that the second element will be better in the 2012 and the first element - all the NII coming from clients in line what we have seen in 2011 and in line with the grade expansion that we expect for the entire 2012.

Regarding the second question, the effective tax, yes, you are right. We had a higher effective tax in the 4Q. We don't expect to maintain this level for the coming quarters. Basically, if you see the - in IFRS, for instance, the tax corporate that we had in 2011 was 27%. In 2010, it was more or less 25% -- 24%, 25%. The outlook that we have for the entire 2012 is more or less around 28%, so in line with the entire 2011 - yes, but for the 4Q, it was a little bit higher than the rest of the quarters.

Okay. Thank you.

Your next question comes from [George Freedman] with Bank of America.

Hello. Good morning, everyone. Thank you for the opportunity. I notice that the [MEPL] in the 90 day still went up by 20 basis points. Just wondering what is your outlook for the year of 2012 and how to you expect provisions to behave? And I will do a follow-up on this question later. Thank you.

Thank you, George. Oscar, please.

Hi, George. Thank you for your question. In the 90 went up 20 basis points, which was in line with what we said in September, that we're expecting to see an increase around - actually, a little bit - it's behaved a little bit better than what , it's behaved a little bit better than we said because we said that we expected that we could see still an increase between 20 to 30 basis points. And it's lower than our expectations then.

You were asking me what do we look at going forward? We're expecting our first quarter that because of seasonal performance, it might be still a little bit higher than what we saw in the last quarter of 2011. But looking at 2012 as a whole, we expect after the first quarter to see a stabilization of the - over 90 with level for improvement. We consider that the strong and solid fundamentals of the Brazilian economy is support an improvement in the level of over 90. Yes?

No, no. That's perfect. I just - a compliment asking about how you see then the coverage evolving because coverage dropped slightly. But I don't see - I don't know if I believe that there is still room for your further adjustments on the provisioning coverage going forward.

We're comfortable with the level of coverage that we currently have. And we don't expect to see any further impact that will reduce them. If we expect to see - maintaining - we don't have a target for it, but we expect to see this same level of coverage more or less.

Perfect. I appreciate it. Thank you.

Your next question comes from Saul Martinez with JPMorgan.

Thanks. Good afternoon. Thanks for taking my call. A couple of questions on your guidance for next year. You give a 14% to 16% growth in revenue. Can you give a little bit more color on how that breaks out between NII and other non-interest components of revenue fees and other line items you have? You have very positive evolution as was mentioned on your net interest margin and you're growing in consumer lending segments. So if you can give us a little bit more color in terms of what the drivers of that 14% to 16% growth are.

And then, secondly, on your loan growth expectation. Again, if you could - 15% to 17% guidance - you're growing. You have very good evolution in terms of mix this quarter, growing more quickly in retail segments and SMEs. Can you give us a little bit more color in terms of what you see driving that growth? Which segments should be growing faster and which segments you see as lagging, perhaps, a little bit?

Okay. Thank you, Saul. So we - our prospect, in terms of revenues is, as I mentioned before, between 14% and 16% in the next two years, as an average. And having us always seeing the system in Brazil a driver, that this is very [credit] growth of 15% to 17%. So next year - let us talk about this year because we already, at the end of January - and we are referring to 2012 - we do not see a reduction in spreads of the products.

So normally, a credit growth of 16%, 17%, that it's seen today, the most probable thing - issue 3% also growth in terms of revenues about the same size. Although there is a situation and this is that the Brazilian credit mix is evolving in the last year. So people are taking more loans, more credit from the - from products that have lower spreads. And for us, as banks, at lower rates as well.

I see that the growth of revenues will be in the range we mentioned, 14%, 15%. And in terms of products, I will - I would mention mortgages concerning individuals, still credit cards that I think are going to grow at a similar rate of the year 2011, and I think SMEs will grow very fast as the macroeconomic scenario we have is going towards 3.5% to 4% GDP growth. Our prospect for 2013 is 4.5%, close to 4.5%. So SMEs will be, probably, a strong driver of growth in terms of revenues.

And as we mentioned in the Investor Day - at the Investor Day in London, we are trying to leverage some parts of the market where we have a special advantage. Sometimes, because we have lower market share than would be our natural market share, sometimes because we have a capital ratio [that is so] and so we can enter some products that take off more capital from the banks. And we can support it more easily.

It is still that the Central Bank draw back the macro-potential measures that were penalizing the capital you need for some products. But we still have a strong capital ratio and we are going to play it with strongly, but at the same time, in a very conservative way.

So all together, our growth in revenues should come from growth in loans to some. Especially to some parts of the market, I would mention that in the last two quarters, we increased the market share loans at about 1.5 percentage points. So we have some opportunities that we are going to take right from the beginning of the year.

There is also a new situation and this is that the payments - the payrolls here, the system for public employees is - has changed since the beginning of the year and we think - we believe that, with our expertise, we have a very good opportunity to increase, picking up civil servants that have to pay the payroll in a different time. So at the same time, are trying to develop an approach more integrated so that - between the segments - so that retail bank and investment bank, they work together closer and this should improve some of our revenues for the year 2012 for them.

Okay. Great. That's helpful. Just one quick follow-up on your guidance. I know you have - a lot of us, obviously, look at it - look at you guys in Brazilian GAAP as our primary financial forecasting methodology. But when you look at the guidance - 14% to 16%, 11% to 13% cost growth, 15% earnings growth - is there any notable difference that you see that you could pinpoint that would cause the Brazilian GAAP numbers to be notably different next year?

For example, credit losses normalizing and, hence, you seeing perhaps even strong bottom line growth in Brazilian GAAP. I know you guys look at in IFRS, but is there anything notable or obvious that you see that could cause the outlook in Brazilian GAAP to be very different from what you're guiding to in IFRS?

Thank you, Saul. I pass you over to Carlos again.

Saul, no, regarding your question, no, there not notable that - I know that - we know we are going to compare that there is a liable big difference this year in terms of cash provision between both methodologies of both criteria.

But the outlook that we have, based on our Brazilian GAAP for 2012 and 2013 will be in line with the forecast, with the accounts that we made we share with you. So you - we don't expect major difference for tax line or the entire criteria. So you can consider that this guidance, based on Brazilian GAAP at the same way that it was based.

I have to remind you that the guidance that we made in London was based in IFRS Spanish GAAP because all the information where we showed at that time, it was based on IFRS for Spanish GAAP. But to finalize your question or to answer your question, yes, you can base the same figures or the same guidance for Brazilian criteria.

So Brazilian GAAP earnings growing 15% as well. That's what you ...

Exactly. Exactly.

All right. Thank you very much.

Your next question comes from Mario Pierry with Deutsche Bank.

Hi, everybody. Let me ask you just one question. Looking at your ROE, the profitability of this bank today, whether we look in Brazil GAAP or in IFRS, is at the lowest level we have seen in more than two years. So I was just wondering if you can give us like an overall explanation why your ROE has been trending down and what do you expect to be a stable level of profitability in this bank. And when should we see that a stable level? Thank you.

Yes. Thank you for your question. Yes, this is one of the challenges that we have and this is part of the target to improve our profitability and to close the GAAP between us and the peers. Basically, there is one important and the most important driver should be in the great growth because, as you know, our leverage ratio is quite lower than our peers. We are talking about that our leverage ratio is around eight, nine times, while our competitors are between - in the range between 12%, 13%. So basically, the first driver is to grow our credit portfolio.

And naturally, with - if we achieve our goals, the targets that we have defined for the next three years - and naturally, with the great expansion plus the payout ratio - our commitment to distribute 50% of our IFRS result, which is more or less equivalent to distribute 90% of our Brazilian result with these two drivers plus the investment that we have been making in infrastructure in opening branches, naturally, they will be helping us in order to improve our profitability measure as return on equity, about 100 basis points, 120 basis points per year.

And this is something that is going to take us a couple of years in order to reach, more or less, the return on equity, a sustainable return on equity. But we, more or less, think that we'll be in the neighborhood of 20%. But we have a big gap to close and it's going to take us years in order to achieve that goal. But naturally, if we achieve, once again, our goals, our targets that we have defined, naturally, that we'll be improving the 100, 120 basis points per year.

Tell us - I mean, then I'll ask you then a follow-up question because I do believe, yes, you have the balance sheet. You have the room here to grow faster than your peers. But your loan growth guidance seems to be in line with your peers. And I remember talking to you guys. It was a big change here in the strategy which you wanted to grow more profitable segments like SMEs and individuals.

And thus, maybe we don't see your loan growth growing above the system. Is that still the case? Is that still the strategy is to grow then in more profitable segments than necessarily grow above the market?

And the second question is a follow-up, I remember, right, you guys were calling 2011 a transition year, that the integration was taking longer, was taking a little bit longer to be realized. But that you expected 2012 to be a much better year. But when should we seen then the big improvements in profitability for this bank? Should we start to see already in the second half of this year? Is it like third quarter, fourth quarter? Or when do you expect to see a turnaround in profitability?

Yes, I'll try to answer the second part of your question, Mario. I think the bank, at the final quarter of 2011, started getting out of integration process, really. And so I was - I was pointing this morning, in a previous meeting, that I think the bank will reach the average speed. I don't know the English word - the gross speed - about the second term, the second half of this 2012.

And I think this is quite realistic. At the end of last year in the last, I would say, the last four months of year 2011, you could see that the speed at which we were growing the loan portfolio was similar to the market or even a bit higher than the market and higher also to our - some of our competitors.

So I think we should stick to this speed and this could lead us to increase our loan portfolio, similar to the market, but a little bit above the market. And in terms of products, I don't - I do not see a change in the mix of our loan portfolio in 2012. What I would see is perhaps an acceleration in terms of the mortgage loan portfolio. And Carlos, perhaps you can answer about the first part.

In order - yes, in order to complement something that it was said, I mean, yes, our first priority was to close the GAAP because, if you remember in the first half, we were growing the grid portfolio less than our competitors. And the second half, we recovered our - all the lost [pace] in the first half, so we have to first make sure that we are entering in a new trend and that we are - it's a consistent trend quarter on quarter. This is the first thing. So that's why it means that, basically, the idea is to grow in line with the market as a minimum target.

Later, to gain some market share in a selected [parts], one, described by Marcial, the real estate and mortgages. And there are another two important parts where we would like to accelerate the pace in the acquired business, as you said. We define to increase market share in this important business and to reach the 10% which is - will be that our natural market share.

And the other one it was to recover as part of the market share that we lost in the previous years in the car financing area and this is, more or less, the three parts where we would like to accelerate more than the market. But in general terms, there is a minimum - a minimum target for the entire bank, which is to grow in line with the market in a sustainable, quarter over quarter.

Okay. Thank you very much.

Your next question comes from Marcelo Telles with Credit Suisse.

Hi. Good afternoon, gentlemen. Well, most of my questions have been answered. I just have a follow up on your loan growth expectation. And we saw one of your competitors today coming out with a very aggressive loan growth expectation of 18% to 22%, compared to your expectation of 15% to 17%.

So I just wanted to make sure - the 15% to 17% is really something slightly above the market, as you see, because if you have a big player willing to go at a such high pace - 18% to 22% - that means that maybe you'd be losing market share. Can you say that maybe the other guidance from your competitor might be too aggressive in light to what your investors are seeing for the resident economy this year?

And the other question that I have, in terms of your operating expenses guidance for this year, you mentioned in some the other meetings that we had that there could be the possibility of some relief in terms of the other operational expenses this year. And I know this part of the question was answered by Regina, but if you - is there any room for, let's say, positive surprises coming out of that line? Thank you.

Okay. Thank you, Marcelo. About our prospect and our guidance of 15% to 17% we gave in - at the end of September, it was really made at the time when there were more doubts about the impact of international crisis in Brazil. And where, if you remember, the Central Bank was still talking about the growth of10% as a target for the system in the year 2011. The Central Bank started talking about a 15% growth. It was in the beginning of the year, coming from the 20s, approximately.

And then some months later, after the macro-potential measures and some other measures taken by the Central Bank, it went to the range 10% to 15%. We always thought the credit growth would be between 15% and 20% in the year 2011 and, in the atmosphere of September, we thought 15%, 17% was the best guidance we could give to the market.

Now I think it's a bit early to say that the credit growth is going to be more 20% to 20-something percent during this year. But we are going to be very close to the evolution of the market as we cannot forget that there is a process of reducing the interest rate, the basic interest rate that will certainly have a certain impact on the loan portfolio - on the growth of the loan portfolio.

So we are not going to change still our guidance, but we will be very close to the market following in the next weeks and in the next couple of months what the market is looking like and what could be a different guidance. As for today, we are not going to move the 15%, 17%. Probably today we see the situation more on the level of the 17% than in the 15%. And Carlos, can you answer the ...

Yes, regarding the - Marcelo, regarding your question, yes, what we expect for that line, for all the provisions, is to normalize the evolution for 2012. And you can see that, in the first - in 2011, this line has grown in a very important matter - 18% in the IFRS. And the idea is that with all this strategy, to normalize the evolution, this is a line that naturally is going to grow in line with, more or less, Selic. And this is something that we expect to see for the entire 2012.

Thank you.

Thank you. The Q&A session is over and I wish to hand over to Mr. Marcial Portela for his concluding remarks.

Yes, I think it has been interesting. I thank you for the questions you have put and we will keep in touch for the weeks to come. I thank you all and bye-bye.

Thank you. This does conclude today's conference call. You may now disconnect.