伊塔烏聯合銀行 (ITUB) 2025 Q4 法說會逐字稿

Hello, good morning everyone. My name is Gustavo, and it is a pleasure to have you joining us for our fourth quarter 2025 earnings video conference. As always, Milton will walk you through our performance, and afterwards we will have our traditional Q&A session in which analysts and investors will be able to interact directly with us. Before handing the floor over to Milton, I would like to share a few instructions to help you make the most of today's event.

(Event Instructions) Today's presentation is available for download on the hot site screen and as always on our investor relations website.

With that, I will now hand over to Milton and we will reconvene later for the Q&A session. Milton, over to you.

Good morning. Welcome to another earnings release. Today we will review the results for the 4th quarter of 2025. I will also discuss our outlook for the coming year and provide guidance for 2026. In addition, I will share an overview of our journey so far, highlighting our progress over recent years and the key achievements in 2025 to provide greater transparency into our agenda at the bank, though not exhaustively.

Let me begin by revisiting our history. First reinforcing the pillars that have guided us. And proven essential to our management model. Client centricity remains our top priority. And the central focus of the entire organization. Delivering on this commitment has required a comprehensive cultural and digital transformation within the bank over the past years. While this is an ongoing process, The advancements have been highly significant.

Our risk management culture is a distinct competitive advantage. We maintain a long-term perspective and the ability to thoroughly assess all risks to which the conglomerate is exposed daily. Risk management is fully integrated across all business areas and is not solely the responsibility of the risk division, which is why I emphasize this pillar as a competitive differentiator. Capital allocation is another key area of focus in our management and daily decision making models.

As well as in our remuneration structures. We maintain strict capital allocation discipline. Choosing the right place to allocate capital at the right price. And with appropriate returns, always with a client-focused, forward-looking perspective, which is fundamental. The modernization of our technology platform and data architecture has been a critical enabler of all our achievements.

We have made years of substantial investment and transformational changes in our platforms. Including the modernization and simplification of our legacy systems. Which notably are now scheduled for decommissioning. Therefore, we remain highly optimistic about the potential of this agenda, particularly with the ongoing review of our data architecture. We have developed a much more centralized architecture with a single source of information for the entire bank, democratized data across the organization, and a cloud-based data mesh.

This evolution has significantly enhanced our capacity to apply artificial intelligence to our business, from launching new products and improving client interaction to process optimization and gains. This transformation has been instrumental in achieving these improvements. And last but not least, let's touch on strategic cost management and efficiency. This is not about cost for cost's sake. Efficiency is a core guiding principle across the bank. We have been able to invest significantly in this transformation while delivering strong results and profitability, with revenue growth outpacing cost increases over the years as reflected in our efficiency ratio.

With all these investments made in technology platforms, and digitalization of the organization, we have entered a critical phase of scalability. Operational scale is now essential, especially for certain business lines, which I will detail shortly.

How does this translate into results? Our loan portfolio grew by 40% during this period, a significant increase. During this process, we also carried out a relevant de-risking of certain portfolios that did not deliver adequate returns according to our portfolio management framework.

Which is one of the core disciplines within our risk management culture and capital allocation pillar. This relevant de-risking protected us from several million in potential losses and from a deterioration of key delinquency indicators. It also left our portfolio significantly stronger and better positioned with higher quality to support future growth. In terms of numbers, we saw a notable expansion in ROE, rising from 19.3% in 2021 to 23.4%, a substantial increase in the period. Our efficiency ratio improved from 44% to 38.8%, representing a significant reduction as well. During this period, we distributed BRL105 billion in cash dividends.

Eating to a payout ratio of 57.9% in the period. In other words, we generated strong value creation and profitability, maintaining discipline in cost and efficiency management, which translated into significant returns for our shareholders. And how do we measure value creation within the bank? Here we can see a 2021 snapshot. The bank delivered net income of BRL26.9 billion. Generating value Based on our models and the cost of capital in line with market methodologies of BRL9.3 billion.

In 2025 we reached consolidated net income of BRL46.8 billion. With value creation of BRL18.5 billion, twice the value created over the period and double what we delivered in 2021. This represents very strong growth with quality, sustainability, and consistency, and above all with a high level of discipline and value creation.

This slide contains a lot of information, but my goal is to provide an overview of our 2025 performance. I will now delve into a few highlights. Starting with stakeholder satisfaction. The first metric reflects how we are evaluated by our employees across the bank. We achieved an EPS of 83 points. Very close to historical highs. Which demonstrates the significant progress we have made internally in terms of workplace environment.

Culture, entrepreneurship and our ability to attract and retain talent. Creating a truly productive environment.

It is within this environment that we are naturally able to take care of our clients. In 2025 we achieved an all-time high consolidated NPS. With record levels in the middle and high income segments, two segments that are highly relevant to the bank. And remain central to our strategy.

For our investors we did not present this information through valuation multiples. Share price performance or stock evolution over the period.

We always maintain a very long-term perspective. The bank's total shareholder return over the past five years has been outstanding. Demonstrating our ability to deliver value and earn investor recognition. That said, we chose to highlight this performance through the Excel survey. Where we were ranked as leaders across all categories for the second consecutive year.

I am very pleased and would like to once again thank our investors for their trust and recognition.

Our sense of responsibility and dedication only continues to grow. From a technology standpoint, we achieved a significant reduction in incidents as a result of our modernization agenda. Incidents were reduced by 99%, which is a very relevant achievement given the size and complexity of our architecture, our platforms, and our operations across multiple businesses. One theme that I consider central to this modernization is speed. It is our ability to deliver value to our clients with much greater agility and responsiveness. As a result, our delivery speed increased by 2,600%, representing a truly transformational shift. When we analyzed scalability, a topic we have discussed extensively, we achieved a 45% reduction in our unit transaction cost, demonstrating that we have indeed been able to carry out this transformation with high-quality, depth, and very consistent results.

In retail banking, both individual and business, We delivered numerous initiatives throughout 2025, making it a highly significant year. I will highlight a few. First, we migrated 15 million clients to the super app with a primary focus on client experience, as evidenced by an NPS of 80 points. From now on, we will have a full banking relationship with these clients.

In terms of speed We increased our delivery pace by 4 to 5 times. Developing new products, addressing client pain points, and achieving high adoption and activation rates.

The transaction volumes on these new features are substantial, including pics on WhatsApp powered by AI, piggy bank, Cofrinos, limit transfers, and collateralized cards, among others, a robust suite of offerings for our clients.

The modernization of our platform enabled us to participate quickly in the new private sector payroll loan program. If you look at the data from inception to now, we have regained leadership in this area.

We had already led in the previous private sector payroll loan model and have now returned to leadership in production over this period. We maintained our leadership in portfolio size with significant growth, quality, and a long-term perspective.

We also saw a notable increase in digital adoption among our clients. Our investments in technology, cultural and digital transformation, and best in class client service have naturally optimized our footprint. In insurance A segment where we have long recognized the need to catch up. We ended 2025 with a 130% increase in recurring results. More than doubling our outcomes in the period.

Encouragingly, we continue to see strong prospects ahead with insurance now an integral part of our value proposition for both individual and business clients.

In the corporate segment I would like to highlight the BRL1 trillion in transaction volume reached in acquiring. As a result, we have secured market leadership and credit.

Which we had already achieved, maintained leadership in acquiring with discipline, focus, new technologies and products, and in payment and collection flow. This underscores the importance of our client-centric approach in corporate retail banking. We launched Ita amps, a 100% AI powered platform with tremendous future potential.

As part of our value delivery and business model for corporate and retail. In wholesale banking, I would also like to highlight a few lines. We are ranked first in fixed income issuance and distribution.

A highly competitive market that many of our large and mid-sized clients have increasingly accessed over the past few years.

We closed the year with 26% market share and BRL124 billion in originated transactions. Continuing in wholesale. As discussed extensively at ITauude, we created the infrastructure and energy segment with specialized focus and structure given the robust investment pipeline. We achieved leadership in EcoI Invest Brazil, a very important program, and recorded the highest fundraising among banks, already enabling BRL12 billion in investments. We had yet another year in which we took the lead at BNDES and in the rankings for foreign exchange, derivatives, and supplier risk.

Once again we stood out in credit, instructuring transactions, in capital markets, and in supporting our clients' day to day needs. We also achieved leadership for the second consecutive year in something extremely important in research, the Institutional Investor, or Extel Brazil for 2 years in a row and in Extellatam, in which we were the winner for the first time. It's a great source of pride to see the work our teams have been doing, once again covering our publicly listed clients with deep discipline and thoroughness.

Turning to Wealth Management Services WMS, I'd like to highlight two areas. First, in the trillion world, we have reached BRL4.1 trillion in assets under management and administration. This is the volume the bank currently has under management and administration. Regarding the open platform, a topic often discussed, the bank operates by offering clients a highly diversified range of products.

We grew 15% in the fourth quarter, reaching BRL422 billion, which shows that it's possible to grow with quality, with strong curation, with discipline, with security, and naturally maintaining a robust system with a very client-centric approach. I believe the numbers speak for themselves.

We also saw significant growth in revenue from our retail brokerage business. An area previously identified as a GAAP. With a threefold increase over the period. Now I will address the fourth quarter results. Covering profitability, loan portfolio, net interest margin with clients, commissions, fees, and results from insurance, and conclude with the efficiency ratio.

For ease of visualization, let's zoom in on the results. We posted net income of BRL12.3 billion riisisis, a robust result for the fourth quarter, representing growth of 3.7% over the previous quarter and 13.2% year over year.

Maintaining a very strong level of profitability on a consolidated basis, ROE reached 24.4% and in Brazil, 26.0%. Adjusted for 11.5% capital, our current industry average and capital appetite as defined by the board, consolidated profitability was 25.4%. And in Brazil, 27.3%. This is perhaps the most comparable number for interpreting our performance in the Brazilian operation with growth and expansion across all dimensions.

How did we build this? Our loan portfolio grew significantly with 6.3% compared to September 2025 and 6% compared to December 2024. I will talk about the year-end guidance shortly.

We reached a loan portfolio of BRL1,490.8 billion, excluding the effects of foreign currency variation. Quarterly growth would have been 4.5%, and annual growth would have been 7.3%. This is because our portfolio is influenced both by the operations of our banking units outside Brazil, which affect balances through currency fluctuations and by portfolios originated in Brazil that also contain foreign currency components. Net interest margin with clients also delivered very solid results, with 1.5% growth over the previous quarter and 8.6% year over year, a strong performance for a bank of our size and profitability.

For services and insurance, it was also an excellent quarter with 5.9% growth over the prior quarter and 9.1% year over year, totalling BRL15.6 billion in high-quality solid results.

We reached our best ever efficiency ratio levels at 38.9% on a consolidated basis and 36.9% in Brazil. We are seeing improvement across all dimensions with continuous progress in our efficiency ratio, which is also consistent with the initial slide I presented to you. Now focusing on the loan portfolio, there is a lot of information, so I will highlight what I consider most relevant.

First, this is a seasonally strong quarter due to year-end purchases which typically boost the card portfolio. Up 8% this quarter. Importantly, and this also explains the margin on the next slide. The transactor portfolio typically tends to grow more this quarter due to a very simple reason higher purchase volumes, whether paid in full or in installments, resulting in 4.3% growth.

The finance portfolio grew 1.6% in the quarter. Both segments posted strong year over year growth. In payroll loans, the portfolio grew by 4%. The main highlight was private payroll loans. With 27.5% growth in the quarter. And 36% year over year. This growth has led to us achieving market leadership in private payroll loans in Brazil with high-quality, profitability. And a very well executed model supported by an outstanding onboarding experience. The next highlight is mortgage lending, and we recognize the importance of this lever for long-term client relationships.

We reached approximately BRL142 billion in mortgage portfolio. The largest among private banks. We surpassed 50% market share in mortgage origination. With over BRL33 billion originated in 2025.

Continuing a strong growth trend. Origination grew 9% year over year and the portfolio expanded 12.8% in the period. Moving to SMEs, we also saw strong growth this quarter. Breaking it down, middle market companies grew 12%. And small companies grew 6.4%. Government facilities which allow us to offer clients competitive rates and suitable terms. Grew 10% Annual growth rates were also robust for both small companies and government facilities. Let me now move on to margins.

As mentioned earlier, given the mix you've seen, we have a meaningful growth component coming from corporate lending. However, in retail, the mix is also an important driver of margins.

There was significant growth in the transactor portfolio typical for this quarter, as well as in mortgage and private payroll loans, which are secure products that while very important for long-term profitability and portfolio quality. Have only a minor impact on the annualized margin in the short-term. In summary, we grew by BRL13 billion in 2025 versus 2024.

In the fourth quarter versus the third, the increase was BRL500 million, or 1.5%. The main driver was volume, supported by strong portfolio growth. The mix I just described has a slight negative impact on margins. Spreads and liabilities margins remain strong, particularly on the liability side.

There were also smaller effects from calendar, wholesale bank structured operations, and Latin America.

Overall, it was a solid growth quarter. Moving on to NIM, there was a slight decrease in the quarter from 9% to 8.9% and 6.2% to 6.1% risk adjusted. In Brazil, NIM declined from 9.8% to 9.7% and 6.7 to 6.6% risk adjusted. This is mainly explained by the mix between corporate and retail, and within retail, the product mix with more significant growth in certain segments during the quarter.

This is the breakdown view as we see it. And this is the annualized margin view I was just discussing with you. Fully within very appropriate levels.

Now regarding NII with the market, I want to highlight that this decline was already anticipated. The guidance itself already implied a slightly lower market margin. We saw very strong performance in Brazil, but it's worth noting that prior quarters were also very strong. Still, performance remained solid. Latin America saw a slightly weaker result due to capital index hedge costs, consistent with what we observed in prior quarters.

I believe our annual reporting is very clear. If you look at the difference in performance, it is not in the top-line. Brazil performed slightly below 2024 while Latin America was somewhat better. However, in terms of composition, the margin was very similar. The main variance is the capital index hedge costs, which increased due to the interest rate differential in the hedge.

The main takeaway is that we are very comfortable with our hedging strategy.As it enables strong capital management with high predictability. And consistent dividend payouts over time. This approach has reduced volatility in our capital ratio, and we review and discuss this policy every 6 months.

Now let's move on to commissions, fees, and results from insurance. I will emphasize what I consider most relevant. I talked earlier about payments and collections. We posted a 5% improvement in the quarter with a very strong transacted volume of BRL301 billion, an impressive figure reflecting growth of 16.8% in the quarter and 22.8% year over year. In asset management, we recorded 14.2% growth.

Making this a particularly strong quarter, also benefiting from performance fees as previously mentioned, we reached BRL4.1 trillion in assets under management and administration. I would like to highlight our record net inflows in 2025, totalling BRL156 billion riaiss. An increase of 49%. Once again, this demonstrates our credibility, ability to deliver value, long-term vision.

And most importantly, the trust we build daily with our clients. In advisory services and brokerage, we had a strong quarter. With growth of 17.1%. We remain market share leaders and as previously mentioned, With BRL124 billion riaiss in originated volume year over year, there was a decline as 2024 was a record year for advisory and brokerage results, especially in corporate debt.

Nevertheless, we outperformed our initial expectations for market volumes this year. Insurance, pension plans, and premium bonds results grew 1.9% in the quarter and 17% year over year. The most important message is that our earned premiums continue to grow 13% year over year.

Recurring earnings rose by more than 20% this year. Following several years of significant growth. Resulting in a cumulative increase of 130% from 2021 to date. Now let's take a closer look at asset quality. Starting with short-term delinquencies, there are a few points to note.

As anticipated in the previous quarter. We had a specific case within corporate, a well-known and widely reported case. That had moved into short-term delinquency. Our expectation was that it would be removed from the balance sheet, sold, and restructured by year end, which is exactly what happened.

This explains the spike in September and the decline in December. Without this event, the indicator would have remained flat when looking at total Brazil and Latin America. Indicators remain well behaved.

In Brazil, two effects are noteworthy. First, in individuals where we reached the lowest delinquency rate in our history, demonstrating that our portfolio management over the years. Has yielded important results. With portfolio growth, value creation. And a highly sustainable portfolio.

The corporate effect is also evident here. Short-term delinquency peaked at 1% in September and dropped to 0.03% in December as the specific corporate client I mentioned was removed from the balance sheet in the fourth quarter, reinforcing information previously shared regarding long-term delinquency. There are no major developments. The message is that delinquencies are very well controlled, as well as in Latin America, resulting in solid outcomes. Across portfolios, individual delinquency stands at 3.6%, which is historically stable.

For SMEs, there was a slight increase in line with what I had previously anticipated, particularly driven by the rollout of government-backed products with grace periods. We expect these delays to normalize over time as grace periods end. These are well collateralized portfolios, so while delinquencies occur, they do not significantly impact losses or portfolio results. In terms of long-term delinquency for corporate.

We make a caveat because we actually had a sale. Without considering this sale, it would have been an increase of 0.9% points, which indicates a certain stability. It is worth noting that this is not an indicator we like to monitor, especially for large companies.

Regarding stage 2 and stage 3 exposures, there are no major developments except for a decline in the stage 3 portfolio, especially in corporates. This is exactly related to the exit of the specific corporate client I referred to earlier. Once the exposure is sold, it exits stage 3, driving this effect. You can also observe a slight decline in coverage, as this was a corporate client with a high level of provisions consistent with its risk profile. This credit leaves the portfolio with a higher coverage level than the remaining balance, which explains the slight decline in coverage. I would say these are the only two highlights, and ultimately they both refer to the same case.

Turning now to credit costs, we have recorded BRL9.4 billion in credit costs, representing 2.6% of the portfolio, an absolutely stable ratio if you look at the historical series. On a year over year basis, there was a nominal increase, which is expected given the significant portfolio growth during the period.

This is why we always prefer to look at the credit cost to portfolio ratio, which is at a very healthy 2.6%. When looking at the restructured portfolio, the key highlight is that the specific case I mentioned earlier was classified as restructured, as you can see here.

This nominal decline is primarily explained by that event, which is also why the percentage of the total portfolio has declined. This is the main takeaway for this section.

Now turning to expenses. The first specific point is that while costs typically tend to be higher in this quarter, They remained very disciplined with just 0.5% growth in Brazil, which demonstrates the direction and trend. This will be evident in forward-looking guidance for the year, expenses grew 7.6% in Brazil and 7.5% overall, which is perfectly in line with the midpoint of our guidance, demonstrating our discipline and predictability. Much of this year over year cost increase stems from our capacity to absorb relevant investments made.

As well as higher volumes combined with lower unit costs. However, this is an operation that is generating more business and higher volumes with our clients, which results in variable costs. Naturally, the bank's profitability also impacts costs due to compensation models. We always see an effect in this regard, which is healthy given the level of profitability and results the bank has been delivering.

Now regarding the efficiency ratio, it is worthwhile to look back at the historical series starting from 2019, both consolidated and in Brazil. There has been a substantial reduction over the period, reaching 36.9% in Brazil, the lowest in the series. This demonstrates our commitment to client-centric care, strategic investments, results generation, increased productivity, organizational efficiency, and a strong focus on operational scale.

This remains a central topic for us. I would like to share some new information with you, and as we classify it on a base [100]. Given the sensitivity of the data. We have broken down our business into different views. As I often state, IAU Unibanco is a diversified business portfolio. It is a very large wholesale bank and a very large retail bank. It is a major player in the region and the most international bank in Brazil.

We have significant regional operations. With 18% of our assets and 8% of our results coming from outside Brazil. This highlights the diversification of our portfolio. Which is concentrated in investment grade countries in South America.

On this slide we have outlined what we consider benchmark segments, whether in wholesale, retail, or those areas where we believe we have already achieved a global standard of efficiency. Naturally opportunities remain and we are constantly monitoring them. Especially in this new era of artificial intelligence and emerging technologies where there is always room to optimize further.

However, if you look at this [100] base chart from 2024 to the present, you will see the business and segments that have successfully maintained their efficiency ratios. For Latin America, the curve is heavily influenced by foreign exchange effects, so I will set this aside for a moment. Although it naturally impacts the consolidated figures on a consolidated basis, using a base 100 view, we can see our efficiency ratio moving from 100 to 98. The key is that our most significant progress in efficiency is occurring within the scalable segments, specifically retail, both for individuals and SMEs where technology, value proposition, scalability, and productivity are fundamental.

Long-term, this is what will differentiate our ability to better serve our clients and expand to new client groups that, given our current cost structure and efficiency ratio.

We would otherwise have less capacity to absorb credit losses from. As you can see, I am already sharing an insight for 2026. We started from a base of 100 in 2024 and reached 94 in 2026. Our ambition is to continue improving this trend. Therefore, much of the investment and the transformation carried out in previous years is what allows us to accelerate scalability moving forward.

It is a robust digital offering, a powerful platform, and an optimization of the business and service models and a strong value proposition.

We are very optimistic, not only with the evolution of these elements, but also with the prospects.

Regarding capital, at the end of the day, all the results and discipline I've mentioned translate into strong capital performance. In the first block, we have the pro forma for December 2024, where we achieved a CET1 ratio of 12.3%. Net income generated 3.3% in the period. There was 0.8% capital consumption from risk-weighted assets. Regarding dividends and interest on equity, there was 2.5% capital consumption.

We also had a positive 0.2% capital variance from new 81 issuances, primarily in the domestic market. These factors led us to reach a CET1 ratio of 12.3% and AT1 of 1.5% as of December 2025. It is important to that in the first quarter of 2026 we already have some regulatory events that are consuming part of this capital surplus. This was all factored into our planning when we decided to proceed with the early distribution of additional dividends which we typically pay in March but executed at the end of 2025.

Regarding interest on own capital and dividends. We distributed BRL9.7 billion in paid and provisioned IOC. And BRL24 billion in additional dividends and interest on own capital. Resulting in a total payout of BRL33.7 billion in 2025.

Representing a payout ratio of 72%. This is a strong distribution which is only possible due to high-quality and robust capital generation. Our focus is to maximize the profitability of the business, but when we determine that there is excess capital beyond our expected opportunities for deployment and returns, our objective is to distribute it to shareholders.

Now I will present the accountability regarding the guidance. I won't go into detail line by line.

But visually we came very close to the midpoint in almost all guidance lines throughout the year.

The loan portfolio grew by 6% while financial margin with clients increased by 12.1%. Our financial margin with the market reached BRL3.3 billion. Credit cost was BRL36.6 billion, and commissions and fees and results from insurance operations grew 6.3%. Non-interest expenses increased 7.5% in line with our budget, and the effective tax rate was 29.7%. This demonstrates not only our predictability, but also our control over key levers.

Looking ahead to 2026, and we will have more time to discuss this during our Q&A session, I would like to add a very important comment. As previously said, we expected to make some reclassifications across line items in our management reporting model as presented in the MD&A.

We conducted a review to ensure that the way we disclose our results is an accurate reflection of how we manage the bank.

As a result, there were some delayed adjustments that we wanted to implement. And we waited until the end to make those changes.

There is no right or wrong here. This simply represents the most accurate depiction of what we do and how we manage the organization. You will see that at the end of the day, the bottom line remains unchanged, with recurring managerial net income of BRL46.8 billion in 2025. In other words, there are no. To the total result, the variations are purely between line items, and of course the investor relations team remains fully available to walk you through the details and provide further clarification. I will try to explain this in a simplified way. What we refer to here as the main reclassifications account for roughly 90% of the adjusted amounts.

Let me give you a practical example. Historically, card network fees related to issuing and acquiring were split between non-interest expenses and a deduction from banking product revenues.

We are now reclassifying all card-related expenses, both issuing and acquiring, from non-interest expenses to commissions and fees. As a result, you can see a positive impact on expenses, while this helps explain part of the negative effect observed on commissions and fees. That is one example.

Another example is the discount of receivables financial margin. As we have mentioned in previous earnings calls, part of Radi's results was previously allocated in commissions and part in financial margin with clients. Within financial margin with clients, there were two components discount of receivables financial margin and the cost of funding of automatic discount of receivables, Flex. Both were previously classified under financial margin with clients. We are now reclassifying everything related to Reddit to the commissions, fees, and results from Insurance Line. This also helps explain part of what you are seeing here, namely an increase with clients, as the flex cost of funding, which was previously recorded in that line, is now reflected as a reduction within commissions, fees, and results from insurance.

A third example involves discounts on debts of up to 90 days overdue. These were previously recorded in NII with clients. We believe it is more appropriate to reclassify them into cost of credit, as they are effectively credit discounts, and we explicitly disclose discounts granted within the cost of credit line. This helps explain part of the positive impact of BRL2.8 billion in financial margin with clients, which is offset by a negative impact of BRL1.5 billion in cost of credit. With this reclassification, total cost of credit would move from BRL36.6 billion to BRL38.1 billion . The key point is that going forward we will refer exclusively to these reclassified results. Another adjustment relates to avenue over which we now have control. Avenue is therefore consolidated into our P&L lines as shown in this column. This has a positive impact on with clients, no impact on cost of credit, and affects other P&L lines where it previously did not.

As Avenue was accounted for using the equity method through 2025 and will be fully consolidated from 2026 onward. The central message here is that our guidance looking forward.

Already incorporates all these reclassifications. Which we believe is the most appropriate way to present our numbers, our results, and how we manage the bank. All future comparisons will be made against 2025 figures adjusted for these reclassifications.

Turning to the macroeconomic scenario, this slide reflects the assumptions we've used. We recognize that the environment is highly dynamic, but these are the inputs applied in our projections and guidance analysis for 2026. We assume GDP growth of 1.9%, a year-end selling rate of 12.75%, with an expected rate cut starting in March, inflation measured by IPCA converging toward 4%.

Unemployment remaining low, but increasing slightly from 5.4% to 5.7%, and the exchange rate moving from 5.47% to [BRL5.50]. Again, these are the assumptions underlying our planning and guidance for 2026.

With that, I will conclude by walking you through the 2026 guidance. First, total credit portfolio growth is expected to range between 5.5% and 9.5%. We highlight that growth in Brazil is expected to be higher, between 6.5% and 10.5%, as Latin America weighs on consolidated growth. All other lines are presented on a consolidated basis. We expect net interest income with clients to grow between 5% and 9% and market between BRL2.5 billion and BRL5.5 billion.

Cost of credit is expected to range between BRL38.5 billion and BRL43.5 billion . Commissions, fees, and insurance are expected to grow between 5% and 9%. Regarding non-interest expenses, it is worth recalling that growth in the fourth quarter of 2025 was just 0.5% quarter over quarter. You can see that there is also a meaningful convergence in 2026 with expected growth between 1.5% and 5.5%, with the mid. Below projected inflation, bearing in mind that banking inflation typically runs above, this clearly demonstrates our ability to capture the benefits of everything that has been implemented over the past few years. We expect the effective tax rate to range between 29.5% and 32.5%. This is our current view for 2026.

Naturally, as the year progresses and more information becomes available, we will update and adjust if needed. But this reflects the best information available at this time. With that, I'll conclude. This was a slightly longer presentation than usual as we covered our historical journey.

The full-year performance, quarterly results, and concluded with a clearer view of our 2026 guidance. For me, this closes a year of very solid, high-quality results. Beyond the headline numbers.

It is critical to look at the quality of the balance sheet. Across all lines we have very adequate provisions. Disciplined capital allocation, meaningful value creation over the period.

And ROE of 27.3% in Brazil. I believe this clearly reflects all the effort behind this journey combined with an efficiency agenda that is advancing at a very strong pace.

This is evident in everything I have just shared with you, including our guidance, and also in the positive outlook we see looking ahead. Of course, this is a year where we expect some volatility. However, our risk management culture, a very healthy portfolio operating at historically low cost of credit levels, and a highly provisioned balance sheet allow us to capture opportunities as they arise.

Whether to grow more aggressively or if needed to manage the portfolio more defensively. In summary, I believe we delivered an outstanding year. Everyone here is very proud of the work accomplished, yet fully aware of the challenges ahead. Past results do not guarantee future performance.

Therefore, we remain humble, disciplined, and focused, but above all passionate and energetic about our work at the bank. That concludes my remarks. I will now join Gustavo in the studio for our traditional Q&A session.

Once again, thank you not only for your time, but for the trust you have placed in the bank over the years, whether as clients, investors, or employees.

Thank you very much.

Well, we're back to our studio with Milton and Gabriel, for the Q&A. Now, before we start, we would like to let you know that we are going to answer the questions in the language that they're asked in English and Portuguese. If you need support, we have the platform for the options in Portuguese, English, or the original audio.

You can also submit your questions via WhatsApp. Let's go to the first question from Thiago Batista, UBS. Thiago, the floor is yours. Good morning, Milton. Gustavo Gabriel. Congratulations on the result.

Once again, the strong result that ITA is delivering. I'm going to get two topics in one question. One is profitability of the bank and the other, capital. A few years ago, we couldn't imagine that the ROI was 24, 25%.

Our doubt is this level recurrent? Can we imagine And that this ROI is going to remain at this threshold all throughout the years and now the leverage of the bank. A few years ago, maybe 10, the target was 13.5 year one, which is not different from the 11.5, 12 of per capita.

But since then, we've seen a few issues. Overhead is over and you do the hedge of the capital abroad. So the capacity Of capital is reduced. Can you keep this ROI of '24, '25 and can we imagine a reduction or an increase of leverage over time to keep this ROI at '24, '25? Hitiago, pleasure to see you once again. Thank you for the.Question.We are very happy with the deliverables and the optimistic with the future.

Now, about profitability. Maybe the best information, as we don't give guidance of ROI on the long-term, but the guidance of this year, we have a profitability in thresholds very close to what we observed in '25.

If you've seen the midpoint of the guidance, we should grow close to what was the growth of '25 against '24 and delivering a bottom line that is very solid with a profitability that is very strong. I don't foresee today any reason why we shouldn't have a vision of the ROI in this threshold that is implicit in the guidance. Of course, the year and the events are dynamic.

For us, the most important thing is always the spread over the cost of capital and we should get into a cycle of reduction of interest rates. Let's see how the premium of risk for the COE for Brazil is behaving all throughout. The year, but as we have a reduction of interest rates of our time to spread over is cap not necessarily at the level of ROI, but we have a long way ahead to see about the leverage of the bank. The point is interesting. You are right.

The overhead brought some volatility to the capital index, but we still have some volatility in the portfolios with the foreign currency. That's how we implement.

The policy of the hedge of the index that is working very well and there is a cost of opportunity, of course. But also we have a predictability that is very important for the prospective management of the bank or for the distribution of dividends.

What happens when we define the appetite at 11.5%, it was 12%, the appetite. We reduced it to 11.5%. That was approved by the board. But we are the board for the distribution of dividends, we work with a buffer of 50 basis points. That 0.5% is what gives us security, tranquility, so we can grow with strength, seize the opportunities that appear. So we don't run the risk of invading the appetite and doing a contingency recomposition of the capital index and losing opportunities thereafter. So having a strong balance while capitalized, we think it's a comparative advantage.

And the scenarios change and can change quickly. We've seen that in the pandemic. So to have a solid capital base is important. Our biggest restriction now to do a review of leverage we've discussed with a lot of frequency, are the rating agencies. What we do not want is to work with the more leverage and losing a rating, which is important.

Even though today we have a capture, foreign capture that is lower than the past, having an international rating that is relevant. Is what brings opportunities for the cost of capture, so we can be very competitive. That's the restriction that is active. We're always debating this, looking at the different scenarios of shock, shocking the balance, and this is a year that can have more volatility due to the scenario of the elections, uncertainties that are up ahead.

It shouldn't be this year that we're going to do this discussion of reviewing the leverage. But this is a theme that is present in our debates. We always have talks with the agencies to try and understand how can that impact our ratings. This is a constant theme in our agenda. I don't think that this debate will advance in 2026, but depending on the perspectives, we can eventually do a review of the level of leverage. Certainly, this is a discussion that we're going to take to the board at the opportune moment.

Thank you. Now, we'll give the floor to Bernardo Gutman, XP. The floor is yours.

Good morning everyone. Gustavo Milton Gabriel, thank you for the opportunity. Congratulations on the result. It's impressive, the level of profitability that the bank is delivering. ROI 27% in Brazil. I wanted to explore those levers in the future. Trying to zoom on that level of efficiency, looking at the guidance of expenses not corrugated to interest rates.

It seems that they're low expenses considering that 2026, there are negative items that are temporary with the adjustments in the infrastructure. So the correct Reading is that '26 will capture a relevant change in the cost of base, allowing the bank to get into '27 with a structure that is more clean, more efficient, creating therefore a driver for operational leverage up ahead. That's the question.

Thank you.

Pleasure to see you again. Thank you for your initial words. The answer is yes and yes. Yes, we are capturing and gathering the fruits of our labor of the previous years. A lot of investment in technology, a lot of focus of increase in productivity, digitalization of the platforms of the bank, the experience of the clients, reviewing the business models, the model of service.

A way of servicing the client in a never more digital way. That slide that I just showed you separated what was the segments that were the reference in reference and those that we can scale. And that's where we get most of the efficiencies that we will capture over the next years. We finish with a projection of 94 at the end of '26.

There is a certain assumption for the guidance for the year. But looking ahead, we are certainly, we are certain that this is the path. Efficiency all throughout the game, operational, efficiency, but it's not brute force operational efficiency. An adjustment of infrastructure reduction without any strategy, no. It's a deep review of everything that we are investing all throughout the years. Most important than that, all this reduction and adjustment running below the IPCA rate. It's a banking inflation because there is an increase in payroll, real, there's other expenses is higher than the IP. PCA.

But all that growth that you see projected 3.5 for the midpoint of the guidance for '26 there's also important volumes for investment. We're investing long-term. We are still investing in our business. We are still investing in our platforms, of course, prioritizing the most relevant, looking at the long-term. Focusing in value creation. This capacity of generating top-line, capacity of absorbing the the investments, doing a deep transformation of the organization.

And now, a period of deliverables that is consistent allows us to open ourselves to more ex investments and expense, expanding those investments. We did investments in several businesses and we will continue with a long-term view without doing without selling out the future. We want to grow sustainably. We want to seek more productivity, more efficiency, more operational scalability. Gabriel is here. He is leading the This front in the bank. This is not a front from the finance BU. He is the leader, but this is a multidisciplinary front. All businesses are involved. Everyone with their own challenges, ones with the threshold that are more efficient than others, but I'm very optimistic that we got into a journey that is very deep of adjustments and scalability.

Thank you Bernardo.

Next question. Renato Meloni, Autonomous. The floor is yours.

Good morning everyone. Congratulations on the results. Thank you for the opportunity. I wanted to expand on the previous questions on the ROI. I think it's natural that now we get into a moment of reduction of capital, cost of capital in Brazil. ROI drops, and as you said, the generation of value is important. So we need to understand more in the long-term. What are The levers that you foresee for the expansion of this generation of value. Are we at a reasonable level?

You've discussed the efficiency, but I remember a comment in the past that as you implement this efficiency part of this is given to the client. So maybe other ideas that can generate more value. And if you allow me, just a clarification of the guidance here, that if we look at the growth of the financial margin and the growth of the portfolio, that implies into a reduction in the line, but I imagine that here you also have the effect of the anticipation of the dividends.

So if you can comment very quickly on the evolution of the line sensitivity to the interest rates and how that will go throughout the year.

Thank you, Renato. Great point. Thank you for being in our call. I think that the levers are throughout the business. They're spread out throughout. The capacity of growing the portfolio with quality, the management of this portfolio has been done for many years. The discipline of capital allocation. This is the name of the game. Growing, generating operations below the cost of capital will always be diluted, will destroy value on the long-term. This is the discipline. And that generates profitability that is necessary through the cycle, always with this long-term view. Other part of efficiency and cost is very important. But as deep down is the binomial cost and expenses, cost of revenue, sorry. So, we've deepened the very consistently with our portfolios. We're doing the deep dive into being the main engager of, with the customers.

This is the main threshold in the history. We're growing two digits in some portfolios. So there is a series of levers, of course, cost is one, but always with this logic of efficiency, looking at our capacity of generating top-line of growth and working with With the cost of productivity. So we can have offerings that are more lean, more digital, better experiences for our clients and simplifying the value proposition and simplifying the bank. Of course, with all this transformation.

A part of this modern technological modernization, We are talking about the decommissioning of the legacy systems in a few years. This is going to be a big difference once we operate in a more variable cost basis, in a more simplified internally way and speed of delivery in technology. I showed 2,000% of growth. Now today we can Develop a product and bringing a solution for the market 5 times faster. So the capacity of throughput of delivering value changed with a very strong threshold. And we will continue to follow-up on the opportunities, cost of equity.

Every month, we're looking at the internal methodology, the market methodology, cost of capital. The the buy side, sell side. And so we have our COPI in meeting monthly, so we define what is the COE of the bank and this affects the capacity of pricing and as you said, I don't believe in a static world that you do the world, the work of efficiency and reduces, but the revenue is always the same, no. In the end, it scale, so you can generate more value, more portfolio, and you can have the returns. Through the cross sale and the reduction of the relationship, but a part of this efficiency has to go to the price. This is what's going to transform ourselves into a platform that is ever more competitive. We're very competitive from the cost of funding perspective, and we're going to be more competitive in the unit cost. Our unit cost has reduced 45% in this period, and we see space for Reductions. Volumes grow, cost, unit cost is dropping. This is the name of the game. Now, on the margin, I wanted to do a reinforcement.

Let me give you some numbers. If we consider the delta dividend that is paid 25 against 24, and the anticipation that was done all throughout the next month in December of last year, this generates for ourselves about BRL1.5 billion. Less margin through '26.

So if the question is, well, Milton, I have the portfolio growing and with the midpoint and 7.5 and the margin of clients is growing 7.

What is the reason of the margin growing a bit below? If we do this adjustment, the margin would be growing 8.1%. In the year. So the margin comparable, normalized, which is what we are going to observe really throughout the year, but the comparable margin for understanding the dynamic of the generation of value of the bank is comparing 8.1 with a portfolio that is bearing a gross 7.5%. These are comparable bases. Certainly, this effect allows us to explain a potential adjustment that is not so relevant, but we have adjustments in the NIN and the consolidated and also in the net cost of credit NIN. So this is important and it's 110 basis points when we look at the effect in the financial margin with the client in a year, which is not little. And it shows that the core, the organic growth is coming at an adequate rhythm with an adequate risk, adequate mix and generating value for the threshold for the shareholder.

Thank you.

Next question, Yuri Fernandez, JPMorgan, the floor is yours.

Thank you, Gustavo. Good morning. Good congratulations on your results. NPs quality of credit lines accelerating short-term deliverables that are good for the middle to long-term. So I wanted to come to focus on the SME.

The how are these deliverables in the small and medium sized companies, should change the profitability of the bank. When we look at the volume, I think it was a very strong quarter. Really growth is above 20, which is 2 times the industry. We also see the Portfolio growing 9 looking at Bam, it's about 3, so we have a share in portfolio, of course it's not comparable.

We don't have all the expanded portfolio, but we see that in pay of payments and volume of credit, I didn't even start. It's being implemented, so it should bear fruit. The question is, given that the SMEs and investors, days, previous ones. They had ROIs above 30, 35, very profitable segment.

How does this impact, going back to the question of my peers, how does it impact the ROE?

We should have SME gaining more traction. We should see the ROE of retail growing more, or maybe there is a, no, maybe there is a question of price, competition, because it seems that this could be a lever of profitability for you. Thanks.

Thank you, Yuri. Great to see you.

Thank you for your time and thank you for the initial words. Now, the SME segment for us as we publish it, we have micro, small and medium. So we mix what we call the BUPJ, which is the companies and the middle market which is managed by Ita BBA. It's a sum of both businesses that are Here, when we add the business model and the profitability, then we break down the the UPJ within the retail and the middle market in the structure of the wholesale, but in the we block them together.

We had an extraordinary result in the companies, whether if it's middle market or the retail companies and these are very, this is a work that has been done for many years, a reorganization of review, deep one of the strategy.

Moreover, the portfolio management, I think that we managed to seize the opportunities and we knew how to grow with the clients always in the long-term view and more so the discipline of capital allocation. We see a market that is very erratic in the pricing in that segment. We always TRY to do an analysis of how much it would have been. Our return if we had been operating in a few operations that are very relevant in some of these segments. And these are returns in operations with funding, without funding and below our cost of capital.

Considering our model which is very efficient. So here is discipline of management of being the main one for the client, having that over overview of flow, so that integration of Reddit with the bank was fundamental.

So we could, in fact, having an integrated vision of the flow. If we see the level of acquireance and the market is just a fraction of the flow of payments and receivables in the system as a whole. So the share of flow is more important than the market share of acquirements and how do we deliver an integrated value proposition for the clients, being the main one is the name of the game. So we've grown with quality. Now, we operate in a level of profitability that is very high in this segment and what I want to say is that we have the expectation of incrementing the bottom line and this is what we expect for 2016 and not an expansion of profitability in the segment given the level of profitability that we already have today, which is above the threshold that you commented a little bit before.

This is for the BU companies and also the middle market. We've done strategic reviews that are constant. We've done another one this year in the companies and the individuals and we also have a solid plan and I'm very optimistic for the future for the delivery of value and execution of these plans.

MES has a role that is ever more protagonist in the strategy of DBU companies. So we We've tested the new technology very carefully, learning with the clients, powered by AI, but the advances are incredible. The amount of products that we have in the platform, it's more a full bank fo focused on the needs of the companies.

Smaller ones, the digital needs, it doesn't, it's no use taking all of the products. You need to understand the pain of your client that you need to solve and how do you interact in a more efficient. Way. So, the platform ems has a more relevant role within the strategy so we can deliver better the base of clients that is within the bank, that is, well, and besides the clients that we've seized over the bank and in a more efficient way, in a more digital way with a better experience. So this is the path of the platform, this is the work and this is the platform has a relevant work in this sense. So I don't see an expansion in the return in The retail, I think that we've done a catch up that is very important since the 3rd quarter of 2022 that I told you, I was very uncomfortable with the level of profitability and we've seen a cycle of expenses and PDD that is more strong.

Looking up ahead, we've done an important catch up, 10% points in the profitability of the retail in a sustainable way. So there is no business performing well or a business performing below the cost of capital. All the businesses are creating value and operating above the cost of capital and with good perspectives looking ahead. It's a balance of the portfolio, therefore, I don't see necessarily an expansion of RI because of this, but I see an increase that is consistent of the franchise of the results of these segments.

Thank you, Yuri. We're going to switch to English as we have Tito Abata from Goldman Sachs. Tito, the floor is yours.

Great, thanks, Gutavo. Hi Milton, Gabriel, thank you for the call and taking my questions, and congratulations on the strong results.

You're very consistent over the years. Milton. My question is on the competitive environment. I mean, if you look over the last 10 years, competitive environment has evolved quite a bit. In Brazil, I think still evolving. We've seen a lot of your incumbent peers having to adapt their business models, a lot of fintechs that have become very strong today, and you, and you've been able to adapt very well, right? I mean, just looking at your profitability, as you just said, right, every business is operating above the cost of capital.

So in that context, so what worries you, is it it could be from incumbent peers adapting, a lot of them more coming after the high-income segments where you're very strong in, is it the fintechs? Is there any segments that you sort of maybe worry about more than others? I mean, you talked about you're already a leader in private payroll, it's a new segment. So, what kind of worries you about this new competitive environment and what do you maybe also most excited about? Where do you see the opportunities from here to continue to be able to deliver these results and where could the risk be?

Thank you.

Okay, thank you, Chito. Good to see you. Thank you for your compliments. We're very proud and thank you for coming to our call. I will tell you first of all that we have a huge enormous respect for our, all our competitors, but as we are a huge portfolio of businesses, so we have in the wholesale many businesses where we compete with the incumbent banks, but also compete with the new. I would say competition. So depending on what segment you are looking at, the competition changes and changes a lot.

So our capability to understand the client needs, to understand our competitors, to be humble, to look outside all the time and understand that we might Have people doing better things that we are and we can do better and we have to leapfrog and go forward has been able to transform the organization in the past years, so I don't see. In any segment today, any difficulty of competing, even though we know the a fierce competition is coming from all around the place. So again, huge respect. I think we have enormous competition in Brazil, good competition. Everybody is doing their homework. Everybody. Trying to get to do better what they already do, and we have to do better and fast.

So I think this is what we've been doing in the past years. So I see a few levers that take us to this place. First of all, human capital. We do believe that we have very good people inside the organization, people that have passion for what they do. We have a very strong culture that put us in a competitive advantage in our view. We have this capability of capital allocation that is very important, this discipline of looking always for the long-term, the capability to do.

Investments all around. So as we're not looking for the next quarter, we're looking for the next 10 years. We do huge investments throughout all our businesses and all the modernization we've done in our platform, the data architecture, the way we approach clients today, all the AI power that we've been.

Releasing in our businesses not only internally but also externally has been putting us in a very, I would say competitive spot.

So this is how we look today, I think in the individuals, just to give you an example, we've gone through a huge strategy revision this year of 2025. We In the execution mode, we did a relevant change in the structure in the retail operation as a whole. Also, the SMEs have been going through relevant change in looking forward. What brought us here not necessarily will take us for the next years. So it's this capability of looking ahead all the time and putting the bar. Very high to get to great achievement. So I think what takes my, what worries me, everything. So I am paranoid here with competition, with the macro, with the level of service we deliver to our clients. This is what drives us, and I think we have the capability and again, human capital, good talent.

Great culture and great capability of execution, I think, are levers that can take us farther. We have to keep an eye on the macro, of course, due to the size of the bank, the macro makes price, of course. We have to take a look at risk, and I think we have a very strong culture, risk culture, so everybody from first line to third line are 100% focused on managing risk. We have a Unique, I would say very great risk area with very good grade and risk people helping all the businesses looking productive and prospective and what are the levers, what are the risks and how we make decisions on a daily basis based on that. So I think this is a little bit of what we've been doing here and this is where we have been putting all our effort in the organization.

Great, thanks a lot, you.

Now going back to Portuguese with Gustavo Schroden. The floor is yours.

Morning everyone. Thank you, Gustavo Milton. Congratulations on the result. Very solid, strong result. I follow-up on the question of Tito, more specifically, I remember that two segments specifically are massified and recently INSS, which is. Security in Brazil and Milton commented that the cost of service that is lower would be ideal to be able to accept the level of delinquency that is higher in the massified and in the INSS Social Security compensating the lower interest rates after the changes in the cap. We see the efficiency level that is very low, 36% in Brazil. All the effort that the bank has done of adjustments in the infrastructure. So. I wanted to be more specific in those two segments. How is the appetite?

Is there appetite? Is there profitability? I wanted to hear from you specifically on those two segments.

Thanks. Sure. First and foremost, we tend to simplify when we talk about the massified, and the name that I've used and it's in the presentation is segments that are more scalable of medium to high. Com where the operational scalability makes a difference. That is important. This is the focus, delivering a value proposition that is more competitive for our clients. With that, we can create the capacity to improve and advance in our efficiency levels.

We work with a series of clients in all the segments, which is low or high income, and these are clients that are resilient through the cycle. So not necessarily is that the client has a lower income that they're not resilient, no. You just see the ones that are retired with the Social Security INSS connecting with your question. It's a customer that has lower income but it's very resilient on the long cycle. And this is for the entirety of the portfolio. So our capacity to look at the data, look at the client, understanding their capacity, facing the obligations in the long cycle, it's regardless of the income sometimes. Inevitably, when you're more competitive from the efficiency level, Your capacity of absorption of losses increases and the review of appetite is constant.

So every time that we do an operation with a client, we look at the cost, whether if it's marginal cost or absolute cost in the segment, the more efficient you are, the higher will be the capacity of absorption of losses. The more inefficient you are, the less space you have to absorb losses and generate a result and remunerate the capital that is allocated in that activity. So the direction that we've gone is Is operational scalability, maximum efficiency, digital, full, so we can service those clients better. It's servicing better, the client better. And here, there is a theme of you having a full digital offer for the client, but you need to have a full bank to be able to service that client in the best way possible. And I think that we have today a portfolio that is incredible, the migration that we've done of the Juanita.

15 million clients. It's not that we took 15 million clients and we improved the experience of the app for the current clients. We migrated 15 million clients that didn't have any experience and not a relationship that was full bank with Zao, and we migrated them to a new platform. And we improved a lot of the platform of the clients that already used the super app. So it's the best of both worlds. We improved a lot what we brought because we brought functionalities of the mono apps that were more advanced for the super app, and we improved. The experience of the existing clients and we migrated 15 million clients and these clients are distributed in several segments. We have clients that are migrated that are target, clients of Personalite, Unicclass, Itahu branches, and we've managed to convert them, importantly, increasing engagement, and it's a full digital service.

Remember that right when we published the results last year, we did a talk with investors. They asked me about Consignado CLT. Well, have a branch structure is going to be competitive well. We don't do subsidies or cross costs. If my channel of hiring is digital, my cost is digital, and I am as efficient as any player in the industry. So this is the way that we've grown in the payroll loan, Consignado and a cost of service that is very low. So it's 100% digital channel. So we don't do cross subsidy or cross costs between segments and the Entry path of the client.

The INSS Social Security, two important issues. First, in this cycle, we had the highest volumes of hiring in the market, but the market decreased a lot, and it didn't decrease because of the cap. The main effect recently of the INSS has to do with the blocking of the benefits and all the work that the ministry and the President of the INSS is doing because of the frauds, because of all the problems that they found. They created mechanisms so that these client reconfirms and will get the benefit once again. So that made the volume of payments of benefits decrease so the payroll loans as well.

Given the volumes that were produced recently, we've released this volume of hiring, much more focused in the internal channel.

We've done an important exit in the external channel because the cap of interest rate makes price and the commissions for the correspondence. Banks doesn't make sense.

So, the return on those operations are below the cost of capital, so therefore, we've privileged 75% of our subcontracting is done with the banking channels, which are if it's digital or physical. So, with two points, with the reduction of the interest rates that we should see up ahead, this will open for the space of new publics and the INSS we can penetrate in public that were left outside and it's a lot of money. Because of the cap, they were left outside and the second effect, which is the capacity of reconfirming the benefits and going back to a certain normality, this will make the volume of demand also increase.

Thanks.

Next question. Marra Piahi, Bank of America.

Good morning everyone. Congratulations on the result, not only on this quarter but also throughout the next 5 years since you assumed the bank, took over the bank. So, one of the big advantages of the bank is all that modernization that you've discussed of the platform, investments in technology.

I think it's very interesting, your slide showing. The cost of technology is growing 18% over the last 12 months.

It represents 20% of your expenses. So how should we think Milton, from now on? How much more investment is necessary? How do you think in investments in technology and now in looking to the future, the percentage of revenue and the investments that you need. To do, they need to come for improving processes, more investment, investments for improving the efficiency, or also investments that help you growing.

How do you see this mix of investments, the value, and a question that wasn't done in a call is if you can just do, well, when you talk about the growth of the portfolio, do you expect for the 26th, if you can specify for Us per segment, what you are expecting of growth. Thanks.

Thank you.

Mario. Always.Great to see you. Thank you for your initial words.

We're very flattered with your words. Now, let me tell you, the investment of the bank is something that we always discuss deeply to ensure one, that we are investing in the Right place with the adequate return.

And 33, also the capacity of absorption of the investments on the long-term because if they're accredited and they generate value, they should be positive throughout the year in our capacity to project. So we always have our back testing and we always look at the investments that were done in the previous cycles and we see in the investment office, investment, so we see the returns of premises are okay. Check what changed, why the result is coming worse or better. We always look at the two sides of the same coin and we always recalibrate in our sensitivity for the decision making process. This is a central point.

In technology, we continue to do investments in the same threshold. There isn't a reduction in investment in technology. On the contrary, it's a mechanical natural growth. We've done an adjustment today. A great deal of our cost is connected to our Talents to our human capital.

This has changed all throughout the years. Today, the cost of headcount is higher than it was in the past.

And if you look at our mix all throughout the years, it changed a lot. A few years ago, we had 7% of our employees were in technology now we have over 20%. Today. That shows how the mix is adjusting throughout the time. Investing more in platform, more. Into communities, more in technology, more in the experience of the client, and naturally that makes it adjusting.

So, that's number 1. Number 2, and here I have to focus on one point. The capacity of absorption of investment is important because of the discipline and activation. We are very careful when we activate an investment in the bank which is an intangible that is amortizedized throughout time. So we are Always careful with a funnel of activation, we would like to say that maybe we activate half of what I could at the limit activate through the accounting rules. And why that?

Because we have the discipline of letting a lot pass through OpEx because we don't want to sell the future and sell out the future and this is an account that once you hire, the math comes in the long-term. And we only activate projects that have benefits effectively. If it's a regulatory change, operational risk.

Or a change in the platform that doesn't bring clear benefits we're not going to activate it because of the discipline of mismatching the benefits that that platform of the investment is going to have with the results that we expect. So they walk in parallel. Secondly, the deadline of activation. We do not activate more than 5 years because we have difficulty in looking at the The of the lifetime of a platform or system longer than 5 years. Every time that you increase the activation deadline, you're hiring a program for the future, knowing that the lifespan of the platform is less than 10 years.

So, you have a new cycle of reinvestment and the platform and didn't finish paying the investment of the previous platform, so you pile up. This is the higher cost that is given through time. So we really pay attention. Into that. And the investment is not just in technology. So, we look at the investment in business expansion, the expansion of Salesforce, expansion or creation of new business models or new products. So, we are always all, at all times looking at that and the rhythm of investment is always in the same threshold. We are looking at the investment in regards to the revenues to see what we are investing. We see how we can project that activation and amortization all throughout the Years, how is that behaving with the company? So all of that management is done in an important way. Your second comment.

And it all depends on the opportunities. It's very difficult to tell you now if we're going to invest more here or there, but I'm going to tell you that the investment in the maintenance of platform it has been reduced and maintenance has been reduced because of the modernization. That we've done in the platform.

A great deal of the investment is to develop new products, new futures for our clients because when you have a high volume of capacity of investment X and then you use 1 for regulatory issues for maintenance of the platform, you end up having very little to invest in your businesses. So what we've done is improving speed up.

We're going to speed up. If there's an opportunity to deliver more, we will deliver more.

Thank you, Milton. Thank you, Jorge. Portuguese going back to Portuguese, Marcelo, Miss Bradesco.

Hi everyone. Thank you for the opportunity and congratulations on the result. Excellent results. The guidance is very transparent. Now, my question has to do, want to understand the scenario of uncertainty about the delinquency.

So I wanted you to Bring your vision on the delinquency of individuals and the companies, different dynamics, of course. As you said, capital markets have been, has impacted the liquidity of the companies and we have the programs of the government. How do you see the impact of the potential reduction of the programs in this year? And the bank has grown strongly. Recently in the SMEs. This is a point and in the individual. We also have the reform, the reduction of the tax, also the liquidity that the payroll has brought to the that the bank has dropped the individuals, the payroll loan for individuals is strong. So I wanted to get a diagnosis on what do you think about the delinquency 426. I understand that we can have different years between the first quarter and second quarter, but any $0.02 that you can Share with us it will be very useful. Thanks.

Thank you Marcelo, thank you for your initial words.

How about. Delinquency, I would like to say that we don't see any material changes in the indicators of delinquency for 2026.

Evidently, the first quarter is more cyclically, seasonally. It's an increase of delinquency because of all the commitments for the beginning of the year that ends up pulling up the delinquency at the beginning of that cycle, we do not expect a very relevant change from what we've observed in previous cycles. We have a month.

We are practically in February already, so we see a behaved cycle. We see a few portfolios, specifically indicators of industry that we see the delays that are more pressured. And we see the delays that are more pressured, whether if it's in the individuals or the SMEs, the short delays or controls, in all the portfolios, there is no deviation. What we have in the SMEs, and we've discussed that is what I call the normalization of the effect of the governmental programs. So, there is the period of payment now and that pressure. The delays on the short-term but not the cost of credit as the portfolios are well insured and the cost of credit is well behaved.

So I would say no concern with the scenario for '26. Evidently, the scenario is dynamic. If the interest rates, if they don't do the adjustments that we expect, the pressure on the companies and the individuals will be higher, so you can expect a higher delinquency. A good quality for the generation of of employment.

There's a decrease of the employment. There's an increase of investment in labor intensive sectors. So the liquidity that you commented on the intention of the of the taxes, it brings more, well, the inflation of services is very resilient because of this. The commitment of the compromise of Income is very high, even though the salaries are growing in Brazil, the com the compromise, the com compromise of salaries is a big issue and the delays that have been published in the market short-term or there has been reasonable increases in several products and portfolio, and our portfolios have performed differently from the data. So when you exclude our delinquency and all the products, we have a behavior that is very different. Now, it's important to reinforce that a part of this increase In the long-term, has to do with the change in the 446 and a lot of institutions have increased the the criteria for the write-offs, which pressures the delay because it takes longer to clean in the portfolio, but it alleviates the cost of credit in an important way.

We decided in the bank to work with the best expectation for recovery, even though with the flexibility that the 496 gives to the bank. Bank to adjust the write-off for longer deadlines, we maintain the same deadlines since the first day. So there isn't any change in any portfolio, any any delays on the the write-off because you have the number and then you are not doing the provision for expected loss. You start to do the provision for the incurred loss because it decrease the capacity of the models of anticipating the real capacity of reacquiring that. Credit. So, the best proxy for this is to go back 3 quarters in the past and looking at the level of NPL creation that we have and comparing that with the write-offs that are here, and this is a direct correlation 1 to 1.

When you look at the breakdown of correlation, 70% of what it was, 60% of what it was of the creation, three quarters down the line, there is a change of policy and write-off and the, and increasing of the deadline, benefiting on the chart. Short-term, but the math is there, it's higher.

So these are controlled indicators, the portfolio of the big companies, the provisioning is very adequate. We always look the review name by name, but events happen, especially in big companies. Events that were captured by the model sometimes in events that sometimes because of something that we don't control, frauds, for example, we've seen in the past.

We always have to look at the attend with a lot of attention because the wholesale is less statistics and more event and we don't foresee anything. And if we see any case, we provision adequately and we have a balance with the level of provision that is very adequate. Looking at the strength of our provisions and the coverage of all the segments, it's something very important. Something important is that we're not going to stop doing the provision for delivering. The result in a quarter. The provision is a decision is management of the portfolio of the balance, and we're always going to to do the provision in the future. If the ROI drops, then we explain. But the provision is in front of the profitability always. So we're never going to leave the wholesale or retail subprovision to deliver a better result. Marcelo.

Thank you, Marcelo. We are switching back to English again as we have Carlos Gomez Lopez from HSBC with us. Good to see you, Carlos. Please go ahead.

Good to see you. And thank you for taking my call and thank you for your generosity with your time. Among the many good numbers you have, sent to us, perhaps one that impressed me the most is the 50% market share in real estate financing, among the private banks. Where do you see that market going and why do you think you have such a presence there that that the other banks are not replicating. And then, the other question, you're a big consumer of software and IT services. We have seen, a big reaction in the market, to, AI's and going into this space and that has affected the stocks. As a consumer of these services, have you seen a change in pricing when you're discussing with the providers in the last few months?

Thank you.

Yeah, thank you, Carlos. Good to see you.

Thank you for your compliments. First of all, on the real estate side, mortgage business, I would say, we have the biggest saving account, deposits in Brazil after Cash Economica Federal. So looking to the private sector, we have the biggest saving account figures will allow us to be more competitive on the mortgage side as well. So this is one.

Second, everybody has put in the market 100% of our savings accounts with the obligation that we have to provide the 65% plus the demand deposit that we have to live in the central bank, and this year there is this change. They are releasing 5% more of these demand deposits that we leave in the central bank which provide us more liquidity. I think our capability to serve our clients in a very competitive way due to this liquidity structure or funding structure that we have has been able to put us in a different spot in terms of providing credit. So if you took any company in Brazil, any bank, and you compare the rate we offer to our clients, And if we have the same rates offering to our client, I can tell you that the level of return that we have is different from the market because we need less funding from the treasury. Than other competitors that have more portfolio that they have in terms of savings accounts, so that's structurally very relevant, of course.

The products that we have, the experience journey that we have with our clients is not only price oriented. I think we've been able to invest a lot. In the real estate, the mortgage journey with our clients and also this long-term view knowing that the real estate, the mortgage, it's a very important product when we look to its thickness, looking to our clients in the long-term. So I think this is the capabilities that we have and we've been able to deploy a relevant amount. Of mortgage in the market for that reason we have the biggest portfolio. We're always taking Cash Economica Federalo on the side and Banco of Brazil, they don't have a savings account for mortgage. They do that for agriculture, so it's a different business. So I think this is, I would say, the main reason. Talking about our relationship with the tech providers, I think we're going to be seeing a lot of volatility in the market.

Many people say is, it's not a bubble when you look at the technology itself, the capability of scaling that throughout the globe, a lot of investments going into that, and this has been very accretive for the GDP growth, especially in the US, but the question is who will be the champions in the long-term. Because as any other industry, you won't have many champions. You have a few, but everybody is doing massive investments. So the concern that the market has more on the equity side has to do. Am I investing in the champion who will be here in 5 years more? Who won't be here in 5 years more? And as the prices have gone up very strongly recently, we'll be seeing a lot of volatility in the industry. As a client, we've been able to do very good negotiations with all the providers. We have a relationship. With many of them before all these AI phenomenon that we are seeing, so that means that those providers, they look to us and TRY to do to be very competitive due to the level of scale that we have, the capabilities that we have to buy in relevant amount. But of course if you go to the GPR and all the processors that Have to use, then we have to pay market price and it's expensive for everybody, not only for us. So what we TRY to do is to do big negotiations, long-term negotiations. This is the same for cloud. We have long-term contracts with our providers and more than contracts, good long-term relationship with them, trying to understand it through the cycle what needs. We have, how should we measure and negotiate the contract in the long-term, so we are not seeing a huge amount of increasing price. I think the prices has been, of course, due to the level of price that we see today, be competitive and it's not putting additional pressure in our costs.

Thank you, Carlos. Now the last question, Daniel Vazfra. Take the floor.

Good morning, Milton and Gabriel. I just wanted to do a follow-up on the previous question on the government lines we've seen, it's very interesting, the delinquency and the increase in the delays, but it's very, it's not clear in our perception if the FGI can Support this production and rollout for 2026. So if you can comment, if you see that we need for the size of the production of the fund, would you need a recapitalization of the fund of the, this year, and mine is about AI and it's very clear the effects for the cost efficiency. But in business, there is a certain difficulty in making it tangible the potential of growth for the revenues. The bank has always done a lot of benchmarking globally. It's good. And I wanted to hear from you. Do you foresee a clear opportunity in businesses and the potential of revenues coming from Gen AI and all those technologies? Thanks.

Thank you, Danielle.Thank you for taking part in our meeting. The FGI, if we look at the program as a whole, I think that there isn't a better allocation of the governmental programs with better results than ours. This is for the Pranam lines for the FGI. The BNDS has an important role, he, it's the manager of the program. So the allocation of public money, the returns are really impressive because we can get you companies, smaller ones, companies that would have more difficulty in capturing resources under those conditions, especially in the deadlines that we can offer.

So I'm an enthusiast of the program because it's a great application of the public resources with great results. If we do a retrospect in the last years, the The amount of credit that was released in the market, how many clients were benefited, how many people financed the increase in jobs and investments that were done, productivity, the program is a winner.

And what happened is that at the end of '24, the last quarter of '4, we understood that the level of leverage of those sureties guarantees that were done in the FTI were low. So we could bring to the market additional resources, which were, they called it pocket change, but we thought we took that proposition to be NES, we had a conversation.

And with them, and we had an opportunity of returning to the system, an important level of resources and without getting new resources in the FTI fund. And the BNDS did the analysis, they agreed and we could with that bringing, we brought BRL100 billion more for resources for the system. So in the last quarter of '24, if you see the production of the market, you will see that we applied an important volume of resources. Of FGI all throughout '25, the market as a whole, also not all, but some banks applied some resources in the FTI.

Now, for '26, the budget is a certain maintenance of what was the organic of the last years, but without that change, the pocket change that return which is BRL100 billion. So the phenomena, the sensation of having less resources because of that, because the leverage that was done and with the Top-up generated additional resources. We've discussed with the ministry and the government of economy to give its ability for the allocation of public resources. I don't think that we have a better, program than this. There are discussions that are happening. I don't know if we're going to have appetite for an additional, but I would like to say, maybe yes, maybe no.

Prono, no, this is a more definitive organic program, so we're going to see. The growth that is normal of PAP and FTI will depend on this decision that the government has to take of resource allocation and as you said, we would need an additional for the fund so we can produce a volume that is similar to what was produced over the last 15 months.

So we are depending on this decision that is very important. Second point about AI. This is an agenda that is here to stay. We want to be in the vanguard of this movement. It's a great modernization and the review of data architecture. Having done that, has placed it in a differentiated threshold so we can advance in a new era.

We believe that when we talk about AI without in the background having All the knowledge that we have in the several journeys, several products, and several businesses, you cannot train your models beyond the commoditized models. It's a very junior experience from the standpoint of training. So, our capacity of training and doing this at scale and getting great results, training our models with our way of doing things without the experience that we have embarked.

So, this organization of the database of the tokens in the big models and we are using that in an architecture that is making the data democratic and enriching the basis makes us find incredible opportunities in all the dimensions of efficiency, modeling, experience, customer experience, process, internal processes and productivity. So, we've seen advances that are relevant and from the standpoint of the Overview of the client. The as platform that I just commented, it's powered by AI 100%.

So the benefit comes because I can engage clients with an efficiency level that is higher.

So that will bring me opportunity to have more risk appetite because I can accept more losses. This is value generation for the bank and I can be more competitive due to the other offerings of the bank. Of the market and that allows me to gain markets, gain efficiency and gain more clients. So this increases my principality with the client without needing to scale the Salesforce because the cost of service of these new B2C more specialist models, it stems from through people, cost through, goes through a cost of service that you cannot offer for all clients. These models are Very scalable. So I can service the client in an investment world in a very simple way and I can increase the level of engagement with the bank, generating top-line, reducing churn, improving the relationship with the client on the long-term. So we see the PIX through WhatsApp is transactional, a very efficient, cheap platform. This increases the principality of the client because they section with you and now they're using other products, other businesses, and then you are the main bank. So every solution comes from a different angle, but we also believe in the capacity of generation of top-line, not only in the generation of bottom line as you generate more other, you are more efficient to service your clients.

Thank you. Thank you, Daniel, thank you, Milton, and thank you everyone that took part of our Conference call. We finish our Q&A session and our fourth quarter of '25. I will give the floor to Milton to close the session.

Thank you, Gustavo.

Thank you, Gabriel. Thank you, everyone, for being here, for your questions. I finished the initial presentation of the slides, talking about discipline, focus, and humility. So I would like to always bring these issues. I think that there is an additional element which is being serious, and we know the importance of building business models that are sustainable, and we can get the interest of the system and the of the client in front of, well, before the interest of the bank, even though we see in the market a phenomenon that doesn't happen in that way. It's sometimes the interest of the company in front of the interests of the system, and we need to be leaders by example, therefore, we need to do the right thing, do the sustainable thing, because there is no way, no right way of doing the wrong thing.

So this is what we believe. So there is no responsibility that is higher than of any institution of looking at their processes or their clients and the system and thinking about What are the impacts that we're going to generate? I think that this is the primary responsibility of any financial institution and we cannot subcontract that, it's not the fault of the regulator, it's no one's fault. Our responsibility is that, and we have the capacity installed, the technical teams that can understand and evaluate the data, and we don't need an auditor or regulator to tell us if it's right or wrong.

So this is what we see. I am very excited. Even though this is a more challenging year because of the uncertainties in the election, I am very excited with the moment of the bank and we close a cycle of deliverables that are robust with consistency and quality and the results and looking into the future, I think that we have everything to deliver a solid year of quality.

Of course, we have all the execution that is done. Throughout the year, but I am certain that if the conditions are there, we will deliver with a lot of quality and a lot of wisdom without selling out the future, but without anticipating the future as well. So, this is the discipline of capital allocation and creation of value, that agenda of efficiency is very important.

So we can go through another cycle which are the next years that are up ahead. So, I'd like to thank you for your participation, your support, your trust that you deposit in the institution and tell you that everyone is here, we're ready to work with a lot of focus, with a lot of strength, and in a work environment that is incredible with the transformation that we've gone through the years that has produced incredible results and we are very optimistic of what we can do for the future.

Thank you very much, and we will see you shortly. Thank you.